Ford Finance - Have we been treated unfairly?

nickdj

This is my first post and I have just joined to ask for help with a problem.

My Wife purchased a Ford Street KA about 6 years ago (2004), just prior to clearing the finance she traded it in for a Ford Focus. The car would have been worth about £6000 and she only needed to pay about £1000 to clear it off.

Anyyway, she traded it in for a Ford Focus priced at about £9000 with a monthly payment of about £180. This was the same monthly payment she had on the Street KA. A year later (last year) she went back to Ford and advised that she couldn't keep up the payments and wanted a cheaper car with lower repayments. She then took out a Ford Fiesta and was advised she would be paying about £100 per month. She wasn't advised that the £100 credit she was getting was only or 12 months and that she would end up paying £200 per month next year. More than she originally paid and for a car worth half as much even if she bought it new!

This year we started having financial problems and hoped that after 6 years we could hand the car back as we were led to believe last year.

Today we found out that it will be £200 not £100 a month next year, she owes £7000, and the car is worth under £4000.

I think the has been fleeced and that after 6 years and £12000 of payments she owns nothing and still owes money even if she hands it back.

Is there anything she can do? Since she has paid so much and 3 times the cost of the car over the 6 years surely she can hand it back? I think she has been stitched up by the sales guys at Ford.

Any suggestions?

Thanks

Nick

themull1

what is on the paperwork that she signed?

nickdj

I've looked through all the paperwork we have here and there is nothing about how much she pays or anything about the 'offer' she took. All I know i that a payment for £197 comes out of our account, £100 is deposited by the finance company each month. She was not made aware that this was for 12 months only and theres nothing to support it.

What's quite interesting is the cost breakdowns between the 3 cars and how they financed it in the first place.

Here's a bit of a price breakdown.

Street KA. She paid 48x £212 (£10176) before she traded it in for the Ford Focus. She only had £1125 to pay and the car was worth about £5000 at the time.

Ford Focus. Cost £7717.39 ex VAT and with all the bits they added and VAT £9572.74!.
They gave her £3000 for the Street KA and then added £1125 for the outstandig balance on the KA. Total £7697.74 (60 months at £180)

She then found that was the monthly payments were too expensive so last year she asked for a cheaper car (so she thought).

Ford Fiesta. Cost £6995 ex VAT. Add all the bits and VAT £8337. They gave her £7400 for the Focus and then added £7141.72 for the outstanding balance! Total cost £8078.72. (60 months at £197 but with a £100 money back offer).

From what I can see she asked for a cheaper car, got a cheaper car, but wasn't told she would be actually paying more.

I am not sure if they will let her hand it back given that she has paid more than the cars worth. There appears there was a dodgy trick used to get her tied into a 'new' agreement that was not made clear and misleading. She is almost forced to trade it in for something else as I am not sure how she can get out without paying half the amount outstanding (£3500) and then handing the car back.

From my calculation if she keeps it it will cost anothr £9456 (48x £197) and the car will probably be worth about £1500 at the end.

We definately want rid of the car and was lead to believe that she could hand it back after 1 year.

opinions4u

From what I can see she asked for a cheaper car, got a cheaper car, but wasn't told she would be actually paying more.

She sold a car for £7,400 and bought a new one for £8,078. Where I come from the new car is more expensive than the old car. She increased her debt.

Basically there are three forces at play here:

1) Loans usually have interest charged on them.
2) Cars depreciate in value.
3) Your wife is paying for (1) and (2).

nickdj

That makes a lot of sense. It seems really unfair to have paid nearly £12000 to Ford Finance but have nothing to show for it.

The calculation they use is:

new car - trade in price + outstanding payments = new car cost.

If we say it's going to cost £3500 to pay them off and give them the car back then they would need to offer a good trade in price for the Fiesta.

e.g. New car cost = £2000 - £5500 (Fiesta) + £7000 outstanding = £3500

Trying to sell the car privately is unlikely to work, so I'm thinking we have been forced to trade in, or, borrow to pay off the £3500 and get a cheap car for about £1500. At least borrowing £5000 is likely to cost £100 per month not £200.

What do you think is the best option?

Thanks for your help so far.

ilovebanksMCMLXXXI

Hi Nick

I must've read your posts at least 5 times and I'm still a bit confused but I used to do these kind of deals (i.e. upgrades and downgrades with outstanding HP) on a regular basis.

The first thing that sticks out is the Street Ka. In your first post you mention it would've been worth around £6000, then in the second post £5000. Either way, I'd assume you felt the car was worth a good £5k.

On that basis, why was it traded in for £3000? You've lost £2000 there before you start.

The reason why your wife is in a worse position than when she started ultimately boils down to her having three different vehicles without every reaching the end of a finance agreement - every time the car was renewed she incurred more interest as "opinions4u" has mentioned.

£1125 was outstanding on the Street Ka and that has then increased to over £7000 when trading in the Focus and taking on the Fiesta. Although it's not quite this black and white; she is basically now paying the interest accumulated from three finance agreements (the Ka, Focus and now Fiesta).

There aren't many more models Ford do!!

These vehicles are on Hire Purchase (I assume) so I'm not sure why you were given the impression you could just hand the cars back - doesn't work like that.

The Credit Consumer Act will enable you as a consumer to throw the car back to the finance house (Ford Finance) but that will affect your credit rating because you are basically breaking your agreement.

I'd like to offer you a bit more advice if I could as like I say, I used to deal with these kind of deals all the time but I really am struggling to make sense of your figures:

For instance; you refer to this calculation
e.g. New car cost = £2000 - £5500 (Fiesta) + £7000 outstanding = £3500

Yet in an earlier post you calcualted that your wife would actually pay another £9456 for the Fiesta (48x£197). Therefore she has nearly £9500 outstanding and not £7000.

Based on your posts I would say the calculation is more like:
New Car £2000 - £5500 (Fiesta) + £9500 Outstanding = £6000.00

So assuming you could get a part-ex of £5500 your wife would be paying £6000 credit and driving around in a £2000 car. To make that stack-up you'd have to get 0% finance over 60 months to achieve £100pcm and that isn't going to happen.

May just be me but I'm scratching my head a bit on this one

CHR15

ilovebanksMCMLXXXI wrote: »

These vehicles are on Hire Purchase (I assume) so I'm not sure why you were given the impression you could just hand the cars back - doesn't work like that.

The Credit Consumer Act will enable you as a consumer to throw the car back to the finance house (Ford Finance) but that will affect your credit rating because you are basically breaking your agreement.

VT is often mentioned on this site but few have real experience of it's consequences.

As someone who has been directly involved in HP Finance agreements, could you give your take on the Voluntary Termination?

With 50% repaid, a customer VT's the vehicle, we know this places a VT Marker on the credit file.

As someone involved, what effect would it have on you if you saw the VT Marker on a customers history?

Would it affect your decision to proceed with the agreement or would it be rejected?

It's a question many have asked, but nobody has/could answer.

.

nickdj

Thanks CHR15

Sorry, it was late so I can see why my post was confusing and the figures didn't match up. Had been a long day.

As I understand it you can hand a car back as long as you have paid half of what you owe. Problem is getting half to pay it off (i.e. another loan) and once you hand it back it effects your credit ratings.

As it stands the car could be sold for about £3750 according to 'we buy any car' but may get more if traded in or sold privately. We have left 48 payments at £197 which works out at £9546. According to Ford Finance we owe £7000 at this moment in time which means that £2546 is the interest over 4 years.

If I look at the paperwork the car purchase price was £8078.72. So would I be correct that we would need to pay £4039.36 minus what we have paid so far? We have paid well over £1000 so I make it that it would cost £3000 to hand it back. Looks about right to me what do you think?

Another option I have found is to use a debt management service. I am currently thinkig about using them for my debts so sticking the wifes on it seems a logical choice. From what I can see they charge £35 per month so effectively every £100 I pay £65 clears from the total debt. If this is correct then it could solve all the money problems, we can afford the repayments, and we won't be paying anywhere near as much. I have created a seperate post to ask questions and views.

Question now is, does the figures for handing the car back look right? Are they likely to take into account the £12000 we have paid through Ford Finance previously since they have it on record and the person on the phone sounded shocked when he saw it? Or is it better to borrow and sell the car quickly before the price goes down any further?

Many many thnaks again.

Nick

PNPSUKNET

dont go for paid debt management go for free to the cccs and make every penny go to your debts, your 50% mark is 50% of the total agreement inc intrest.

nickdj

Many thanks for all your advice. I had a look at the links provided and they really help.

There is, however, a twist to this story.

We have just discovered that when we took out the new car as a replacement for the Hire Purchase that we originally had, it turns out that this car was put through Santander as a loan. We were not told this.

The problem is that we can't hand the car back, but, since it's a loan I assume we can sell the car use part of the sale to get a cheap car and pay the rest back to Santander. We can then make a 'token' payment for the outstanding payment I assume?

Apples2

If it is a Personal Loan, then yes you are free to sell it (as it is not secured against the car).

It is unlikely they would accept a "token" offer for settlement unless you are already heavily in default.