Hire purchase

Karen36

Hi, hope this is in the right section.I took out hire purchase on a car last week through a garage and then realised it is the most expensive way to do it so want to terminate it and do it another way.My credit agreement says I have 14 days to withdraw and then pay the credit amount and any interest up to the day I withdraw but I wondered whether the garage could give me any sort of penalty if I pull out of the finance? I know that they get commission from finance and I signed an invoice detailing the cost of my new car, the part exchange amount and the finance amount which states is a legally binding contract. I phoned them to see what they would say and they said they would phone me back but haven't done, and in the meantime the clock is ticking on these 14 days.Does anyone know can I just cancel the finance?

Thanks

PNPSUKNET

as its signed on trade premises you cant back out of the sale, they can charge you fair costs in taxing ordering the car etc

bengalknights

There should be a part within the finance agreements that says "Sign here and return within 14 days to cancel" after which you would then have to pay the garage the amount in full via alternate means.The garage would probably charge extra though for admin etc.

~Brock~

The right to withdraw becomes law in the UK on 1 February 2011, but some lenders are applying the new rules now as they have had a transition period since April 2010.

It sounds like this lender is applying the new rules because of they way they have worded the document.

If you withdraw, you must repay the total amount borrowed within 30 days of giving notice to withdraw, together with interest at a daily rate (which should be specified on the agreement).

Note: withdrawing from the credit does not give you the right to withdraw from the contract you have entered into to purchase the car. The two are mutually exclusive.

DO NOT withdraw form the agreement unless you have got the means to repay. If you do not repay the amount borrowed within the 30 days then the amount outstanding will become a statutory debt (i.e. the credit agreement won't magically be reinstated) and you could be taken straight to court without the protection of the Consumer Credit Act.

I suspect there will be a LOT more discussion about this in the coming months........

PNPSUKNET

usefull info didnt know abiout that one

mc33033

~Brock~ wrote: »

If you withdraw, you must repay the total amount borrowed within 30 days of giving notice to withdraw, together with interest at a daily rate (which should be specified on the agreement).

Note: withdrawing from the credit does not give you the right to withdraw from the contract you have entered into to purchase the car. The two are mutually exclusive.

DO NOT withdraw form the agreement unless you have got the means to repay. If you do not repay the amount borrowed within the 30 days then the amount outstanding will become a statutory debt (i.e. the credit agreement won't magically be reinstated) and you could be taken straight to court without the protection of the Consumer Credit Act.

I suspect there will be a LOT more discussion about this in the coming months........

It has always been the case that under the CCA, if the finance agreement falls for any reason (such as withdrawal) then any linked agreement (such as the contract for the hire purchase of a motor vehicle) would fall as well - both parties are put back in the situation that they were in had the agreement never been signed.

I don't believe that your take on the above would be one that the courts would have - we need final legislation of course to assist us here! However what I imagine will happen when the legislation is in force is that if the car is given back and interest costs for the 14 days paid then that will be it.

Without seeing the paperwork in question it would be difficult to give advice to the OP as we don't know exactly what their paperwork says. From the lack of a response phone call I suspect the dealer isn't up to speed either. I think a phone call to the finance company to confirm exactly what they want if the agreement is cancelled would be in order here - then back that up with a recorded delivery letter. And let us know if they want a large lump of cold hard cash or are happy with the car back and a few ££ to cover the interest!

~Brock~

mc33033 wrote: »

It has always been the case that under the CCA, if the finance agreement falls for any reason (such as withdrawal) then any linked agreement (such as the contract for the hire purchase of a motor vehicle) would fall as well - both parties are put back in the situation that they were in had the agreement never been signed.

I don't believe that your take on the above would be one that the courts would have - we need final legislation of course to assist us here! However what I imagine will happen when the legislation is in force is that if the car is given back and interest costs for the 14 days paid then that will be it.

Without seeing the paperwork in question it would be difficult to give advice to the OP as we don't know exactly what their paperwork says. From the lack of a response phone call I suspect the dealer isn't up to speed either. I think a phone call to the finance company to confirm exactly what they want if the agreement is cancelled would be in order here - then back that up with a recorded delivery letter. And let us know if they want a large lump of cold hard cash or are happy with the car back and a few ££ to cover the interest!

I think you've got the wrong impression as to what this legislation is about.

HP is not a linked agreement.....it IS the agreement. Any agreement to buy the vehicle is unaffected by a decision to withdraw from the credit. The dealer has already been paid by the finance company - it is the finance company that needs to be repaid.

Lets be very clear about this. The new right of withdrawal is NOT the same as the old 'cooling off' period that used to apply to off'trade credit agreements. There is no right to cancel any agreement or arrangement to purchase the goods that were originally financed by the credit agreement that is being withdrawn from.

Final legislation is already here, although not in force until 1 Feb 2011. There is a new section (73A&B) of the Consumer Credit Act.

If you don't want to believe me then check out a presentation by the OFT's head of credit policy here. (Page 17 - ".....no right to cancel linked supply contract ") For clarification, the ancillary contract he refers to is simply any additional loan contract for the purchase of insurances such as warranty or PPI.

If it was going to be the case that borrowers could simply walk away from the obligation to buy the goods (for which distance selling regulations are already in place to protect those that do not buy in person) then chaos would ensue and everyone would be up in arms about having to wait 14 days before they could take delivery of any goods, because the retailer would be having to protect himself against people throwing goods back left right and centre......goods that are no longer brand new!

I have no doubt, however, that there will be attempts to exploit and abuse this new legislation by the CAG brigade. Hope this site stays sensible, although I have my doubts.

Karen36

Thanks everyone for your replies and information.I do want to keep the car, don't want to withdraw from that, just want to pay it off by other means that I should have considered before signing for hire purchase but everything happened so quickly. I think I'll ring the finance company as the garage still haven't phoned me back.

~Brock~

Karen36 wrote: »

Thanks everyone for your replies and information.I do want to keep the car, don't want to withdraw from that, just want to pay it off by other means that I should have considered before signing for hire purchase but everything happened so quickly. I think I'll ring the finance company as the garage still haven't phoned me back.

The garage probably think that you want to pull out of the car purchase and have suddenly gone quiet!

Its the lender you need to be talking to. Just tell them that you wish to withdraw (you can do this verbally) and then arrange to pay them the amount borrowed, plus whatever daily interest is added, within 30 days. Job done!

nelly12

~Brock~ wrote: »

The right to withdraw becomes law in the UK on 1 February 2011, but some lenders are applying the new rules now as they have had a transition period since April 2010.

It sounds like this lender is applying the new rules because of they way they have worded the document.

If you withdraw, you must repay the total amount borrowed within 30 days of giving notice to withdraw, together with interest at a daily rate (which should be specified on the agreement).

Note: withdrawing from the credit does not give you the right to withdraw from the contract you have entered into to purchase the car. The two are mutually exclusive.

DO NOT withdraw form the agreement unless you have got the means to repay. If you do not repay the amount borrowed within the 30 days then the amount outstanding will become a statutory debt (i.e. the credit agreement won't magically be reinstated) and you could be taken straight to court without the protection of the Consumer Credit Act.

I suspect there will be a LOT more discussion about this in the coming months........

Brock is quite correct in quoting the new CCD regulations that come into force on the 1st February 2011. I do believe that the likes of Black Horse and Northridge have already commenced adoption of the new rules and it sounds like the OP has such an agreement. If anyone needs any further assistance on this I have several documents relating to the new legislation and it's implications.

jb66

I also wish to withdraw due to the acceptance fee of £250 and the garage quoting me 5% interest but I thaught that was APR not per annum.

If I withdraw before I pick up my car and pay by other means do I still have to pay the £250 acceptance fee?