Voluntarily terminating a HP agreement..

koe_182

About 2 years into a 3 year HP agreement but recently have lost all faith in our car, it seems to have gone dodgy on cornering, had a couple of garages have a look and neither could find a problem. Obviously once its in your head its hard to get over. The problem is its not fully paid for yet.

it has been suggested to me that once you've paid 50% of the finance price you can voluntarily terminate the deal and send the car off.

Has anyone done this?

ideally i'd trade it in but then i'd end up oweing finance on this one as well as a future car.

if anyone has done this, is it simple? whats the process? thanks

Hintza

There are quite a loy of different deals out there. You need to check the small print and possibly take advise. But my understanding is that if you have a guranteed future value then it should be possible.

But bear in mind if you do it you will find probably finance harder or more expensive the next time round.

sigur

I bought a Focus on the Ford Optiona scheme around 2 years ago.

Now want rid of the car and know that resale value wont be good. Anyway, after reading the credit agreement I found out that the car can be returned after 50% of the value/credit agreement of the vehicle has been paid.

So Im buying a new car in April and will be handing the car back to Ford.

BenL

Are you within the agreed mileage? The penalties are large for going over the agreement.

koe_182

i dont have any milage clauses in my contract as far as im aware.

the writing states just 50% or £xxxx.xx then i need to apply in writing for termination.

i didnt realise i would be liable for the difference in auction price, or does this just depend on who its with?

theres no way its worth 50% of the HP agreement these days.

finance company is European finance (Capital Bank - RBOS)

Hintza

Just remember if you terminate early the finance companies will be less likely to lend to you the next time.

You will also need to ensure the car is fully serviced, no dings etc and valeted. I imagine they will be taking no prisoners just now re condition as I imagine a lot of folk will be doing this.

The long term consequences of this will mean cars on any form of finance will become very expensive and will probably be out of reach of many buyers.

Just think twice about it and do your sums very carefully.

standupguy

koe_182 wrote: »

i dont have any milage clauses in my contract as far as im aware.

the writing states just 50% or £xxxx.xx then i need to apply in writing for termination.

i didnt realise i would be liable for the difference in auction price, or does this just depend on who its with?

theres no way its worth 50% of the HP agreement these days.

finance company is European finance (Capital Bank - RBOS)

If you are exercising the vt clause then your liabiility is only to half the hp price providing the vehicle is in a satisfactory condition for its age and mileage.

It does not matter what it fetches at auction - there is no comeback on you.

The only time that would happen is where the vehicle is repossessed due to arrears rather than the agreement voluntary terminated.

The half rule, as it is known, is here to stay under the latest CCA revisions and now applies to all advance amounts where before it was limited to £25k.

Whilst some Finance companies will be looking for a bigger deposit from customers who have vt's a previous agreement and perhaps repayment over a shorter term, there is still plenty of competition amongst car finance companies and lending money on cars is their main profit centre.

koe_182

standupguy wrote: »

If you are exercising the vt clause then your liabiility is only to half the hp price providing the vehicle is in a satisfactory condition for its age and mileage.

It does not matter what it fetches at auction - there is no comeback on you.

The only time that would happen is where the vehicle is repossessed due to arrears rather than the agreement voluntary terminated.

The half rule, as it is known, is here to stay under the latest CCA revisions and now applies to all advance amounts where before it was limited to £25k.

Whilst some Finance companies will be looking for a bigger deposit from customers who have vt's a previous agreement and perhaps repayment over a shorter term, there is still plenty of competition amongst car finance companies and lending money on cars is their main profit centre.

so i have already paid 50% take the VT and thats it? i dont pay any shortfall at all?

and it wouldnt be on my credit history as a bad mark? or would only finance companies take note of it?

so if i get a settlement figure? speak to a garage and see what i would get part ex and if its massive difference do which is better?

Hintza

so i have already paid 50% take the VT and thats it? i dont pay any shortfall at all?

Depending on condition and mileage within agreed limits

and it wouldnt be on my credit history as a bad mark? or would only finance companies take note of it?

Yes they will note it. Technically speaking you will not have a black mark but in reality it will be noted.

so if i get a settlement figure? speak to a garage and see what i would get part ex and if its massive difference do which is better?[/quote]

Doubt in this climate you will come close but worth looking into.