HP motor finance & consequence of Voluntary Termination

Interesting-tale

I have a Hire Purchase (HP) finance agreement on my car. I am over half way through the agreement and due to the current trade-in valuation of the vehicle being less than I currently owe I am thinking about returning the car to the finance company under the Voluntary Termination clause in my agreement.

I've spoke to finance company who are ok about this and simply posted me some forms & instructions should I decide to go through with the VT.

My credit history is A1 five-star and what I need to know is whether or not a VT will have a negative impact on my credit rating.

I understand the Finance Company can 'if they choose' place a notice on my credit record to note the VT - but as this is a clause within my agreememt do/would future credit checks that reveal the VT be seen in a bad light?

Current car is a coupe and the arrival of our baby and all the things we need to get in the car make it awkward - thats the only reason I'm thinking about this, it not that I'm having financial trouble. IF a VT would leave a negative/bad record on my credit score, I think I'd rather live with cramming the pram etc into the coupe...

Any advice would be FAB!

CLAPTON

a VT will probably affect any future HP application but not other financial transactions

Interesting-tale

Can anyone be more specific about the effects a VT may or maynot have on a credit record?

The garage trying to sell me the new car (not surprisingly) are telling me that the VT will NOT effect me in any way... but they want me to buy the new car.

If a VT forms part of the original HP agreement, why should it go against me if I utilise this clause?

KingElvis

You should also be aware that part of the VT will be a very detailed inspection of the car and any damage you may have to pay for.

Search this forum for people who have been charged thousands even though they thought their car was in A1 5 star condition.

All the best

Elvis

Interesting-tale

Elvis, yes I am aware of the charges which can be made if the car is in poor condition.

As it happens, its in great shape & has mileage way below average for its age. I have already taken pictures to cover me regards the condition.

It is mechanically sound to. Always serviced at main dealer and MOT'd etc.

I'm really hopeing someone with actual knowledge of the effects a Voluntary Termination can have on my credit score - if any.

There must be someone with either 1st hand experience OR insider knowledge...?!?

Interesting-tale

Hmm, thanks guys. I'm still un-decided as to what to do.

Nobody has offered any 1st hand or insider knowledge :-(

That said it seems the general opinion is that a VT would have a negative effect on my credit rating. "And for that reason I'm out!"

Joking aside - just really unsure what to do! There are so many conflicting tales / forum threads and so on. I'd hate to do the VT and later find out we have trouble getting credit (particulaly as my credit history is clean as a whistle)

A helpful lady at National Debtline has told me that the finance company will put a note of the VT on my credit record BUT this is not a bad notice to have. She did then go on to suggest I call Experian to see what advise the effects of a VT notice would be.

I'll call Experian when I get a sec & will let you know what they say.

If a VT does effect your credit score, then it seems terribly unfair! saying as I'd have actedwithin the terms of the HP agreement.

iolanthe07

A lot of posters here seem to think that credit scores are not that significant. A lender will make decisions based on your profile rather than an actual score.

Interesting-tale

I've just spoken to Experian (Tel: 0115 941 0888) who say that the credit company with whome you have your agreement can decide how they note a Voluntary Termination - be it bad, good or indifferent.

Therefore Experian cannot say whether the VT will be negative or not and suggest you ask your credit company to see if they will tell you how they record VT's.

Apparently your credit company are not obliged to tell you how they'd log a VT on your file.

Ultimately, all Experian could do was to offer to sell me a copy of my credit report AFTER I've done the VT.... but that kinda defeats the point in what I'm doing. ie trying to protect my good credit score!

Dabooka

My friend VT'd 3 cars on the bounce, all at the same dealership so I'd say it made little difference to them.

HOWEVER, this was before the global financial collapse and I do not know if the terms of his subsequent HP deals were altered (i.e. higher APR?)

Interesting-tale

This is the problem I have. Lots of people with an opinion but nobody yet has been able to say for sure.

I'll call my finance company later and hopefully they'll disclose exactly how they record VT's.

CLAPTON

Interesting-tale wrote: »

This is the problem I have. Lots of people with an opinion but nobody yet has been able to say for sure.

I'll call my finance company later and hopefully they'll disclose exactly how they record VT's.

how will that help?

the way it is recorded on your record record is aa a 'voluntary termination'

the question you need to ask HP finance co, banks, mortgage lenders,CC providers etc is how they treat the VT when deciding whether or not to lend to you.