Redundancy - Outstanding Loan

mark9885

Hi,

My contract is not being renewed this year and have an outstanding loan agreement which is secured on a car I bought. (loan is with in house finance company of a dealer)

I don't mind losing the car as obviously I won't be able to afford to run it.

I have just typed a letter to them, could somebody give it the once over and check if what im asking for if OK.




Dear Sir/Madam



It is with regret to inform you that due to my contract of employment not being renewed, I am unable to meet the repayment terms of the above agreement.

I have spoken to Citizens Advice and we agree that the most feasible solution to the problem is for me to surrender the vehicle to you and then arrange a reduced monthly payment for the remaining balance.

If I were to sell the vehicle myself it would not raise sufficient funds to clear the full outstanding balance.


I hope you can sympathise with my current circumstances and we can come to an arrangement to resolve the situation amicably

standupguy

mark9885 wrote: »

Hi,

My contract is not being renewed this year and have an outstanding loan agreement which is secured on a car I bought. (loan is with in house finance company of a dealer)

I don't mind losing the car as obviously I won't be able to afford to run it.

I have just typed a letter to them, could somebody give it the once over and check if what im asking for if OK.




Dear Sir/Madam



It is with regret to inform you that due to my contract of employment not being renewed, I am unable to meet the repayment terms of the above agreement.

I have spoken to Citizens Advice and we agree that the most feasible solution to the problem is for me to surrender the vehicle to you and then arrange a reduced monthly payment for the remaining balance.

If I were to sell the vehicle myself it would not raise sufficient funds to clear the full outstanding balance.


I hope you can sympathise with my current circumstances and we can come to an arrangement to resolve the situation amicably

Hang on a minute before you do something you may regret - there is much to consider before you do this.

Firstly is the agreement HP or a loan - you say it is secured on the car but a loan is not secured on a car but a HP agreement is?

What is the current settlement figure on the agreement?

What do you think the car is currently worth?

Handing it back will result in car going to auction and lowest price received?

You need to give more info and perhaps look at other options that may be available to stem your losses or liabilities?

mark9885

Hi,

It is a fixed sum loan agreement secured on the car with a bill of sale.

The settlement of the agreement is £3800 and the car is valued at around £2100.

I can not think of any other way out of this.

standupguy

A loan secured by a bill of sale sounds a !!!!-eyed way to get security and if it is that legal then all of the main hp lenders would be doing it to get away from voluntary terminations and the losses that it gives them.

Not knowing much about this, I pasted this from citizens advicse: -

So lending secured by bill of sale makes up a very small proportion of both the consumer credit market and the consumer credit and debt problems seen by the CAB service. However the experience of CAB clients suggests that consumers can suffer very severe detriment after entering into a credit agreement secured by bill of sale. CAB evidence previously sent to BIS has highlighted our concerns about the lending and arrears management practices of bill of sale lenders. We believe that the nature of the bill of sale lending and in particular the almost total lack of consumer protection is wholly unsuitable in a modern consumer credit market. Therefore we support the government’s intention to ban this particular form of secured lending and introduce effective consumer protection in respect lending secured against chattels more generally.


I suspect you would find if you looked into this further that the bill of sale under these circumstances may not be enforceable.

If that is the case then it is up to you what you do.

You may get a better price if you sell the car rather than hand it back.

mark9885

That's a good idea, i'll check whether the bill of sale is enforceable. I just read it will cost £5 and if it wasn't registered within 7 clear days of me signing it then its unenforceable. If it is unenforceable I can sell the car privately and then pay the remaining balance at a reduced rate.

I thought it was a weird way of lending. The dealer apparently searched for different finance deals for me including santander but all declined, amazingly their inhouse finance company (which by the way is owned by the same guy as the dealership) accepted me.

But having checked my credit reports there were no searches recorded by santander, funny that.

standupguy

From what you say, you may benefit from seeing the owner/dealer face to face with a view to resolving the issue between yourselves.

You could not get credit so he took you on and has risked his own monies and he will be looking at how he can get out of this without suffering much loss or resulting in a situation where he is chasing you for reduced sums over a long period - he will probably just want to get out the best way he can and move on.

I would suggest an initial visit to tell him of your changed circumstances and what solutions he could suggest may be available to consider. Do not be bullied by the BOS and be prepared to say that the BOS may well be unenforceable. Do not agree anything there and then - take away any solutions offered to consider further and say you will get back to him.

I suspect intially he could well try to intimidate you but stand firm -ultimately he knows he needs your agreement and to be on his side if he is to get out of this without much loss.

In a situation such as this you should look at real costs and value to get an idea of what this car stands him at?

For example, what do you think the trade value of the car was when he sold it to you (Much lower that the cost retail?) - how much have you paid off? - what does that leave? - what is the cars current value? - deduct that amount and what is left - you are then getting near to a capital outstanding position where he at least can get his capital back?

mark9885

I was implying that the dealer didn't bother searching for other finance first and signed me up with his finance company (which seems to have quite a lot of customers) It is a fairly large dealership not just a guy.

The vehicle was a part exchange so it probably cost him next to nothing anyway. I have a friend who part ex'd with them for £1400, they then sold the car for £3000. Based on the purchase price of mine the true cost to him would be around the £1400/£1500 mark.

I have paid about £600 towards the loan to date.

standupguy

ok, but same principles apply - this is still just a small business who will not want to spend more of their own money taking you to court or be involved in a long collection process of dribs and drabs.

They will be looking to try and get out as best and as quickly as they can.

From what you suggest his capital outstanding may be around £800? - if the car is worth around that figure then a good negotiation for you would be to suggest if you returned the car would he settle the agreement with nothing further to pay - and if so, you should get this in writing before you part with the vehicle.

mark9885

Hi,

Yes the car is currently worth around the £2000 mark.

I can only ask!

mark9885

Righty ho

Just been reading through the Bill of Sale Act 1878(!!!)

It states that:

"The execution of every bill of sale by the grantor shall be attested by one or more credible witness or witnesses, not being a party or parties thereto"

It was witnessed and signed by the guy who sold me the car!!!

Any thoughts on this?

standupguy

mark9885 wrote: »

Righty ho

Just been reading through the Bill of Sale Act 1878(!!!)

It states that:

"The execution of every bill of sale by the grantor shall be attested by one or more credible witness or witnesses, not being a party or parties thereto"

It was witnessed and signed by the guy who sold me the car!!!

Any thoughts on this?

It's a difficult one.

They could argue although he worked for the dealership he did not work for the Finance company and therefore not a party to the loan unless you can prove otherwise?

On the other hand you could argue that he was as he was acting as "agent" for the Finance company under the consumer credit act

All this sort of thing may be best kept up your sleeve and in reserve - first and best option is to make the initial approach and keep it friendly as at the moment you do not know the response you will get