Does Voluntary Termination Affect Credit Rating?

Laconic

I wish to pick the keen financial minds of the MSE experts yet again.

When I financed my car, I did so using a hire purchase agreement which meant that I could voluntarily terminate that agreement and return the car provided I had paid off more than half the note, which I have. I went by my garage yesterday to check that I would be returning the vehicle in 'reasonable condition' and was told there that if I took that option I would be negatively affecting my credit rating. Should I sell it to a dealer, I'm likely to be a couple of hundred pounds short, though I could make a small profit selling privately (which is a lot of a headache).

Frankly, a good credit record means more to me than the size of the shortfall. I can eat that money: it won't hurt nearly as long as a blot on my credit record will and rationally, I'd be losing less than I would if I paid off the entire note. I no longer need a car or just keeping it would be a good option too! What I need to understand is if voluntary termination does have that effect.


L.

yorkshire-lad

You cannot sell the car,it isn't yours to sell.
It's still under HP.

You can hand the car back but your credit report will show that you terminated the agreement early.
It probably won't affect you much in getting loans but it will affect your chances of getting car finance.

The finance company wouldn't be making as much money out of you if you only keep the car for 50% of the term.

PNPSUKNET

garage was talking a load of....... I termed one a few year back, has zero affect.

Laconic

You're quite right. If I were to sell the car privately, I would buy it outright and then sell it. It's not unworkable, but voluntary termination would definitely be my preferred option as I'm well past paying off the half the contract stipulated I needed to pay.

yorkshire-lad

Phone them up and ask for a settlement figure,then if you can pay it off and sell privately.
If you have somewhere to keep the car while waiting for a private buyer then you may make abit of cash.

Laconic

Whew! You can't believe the load you've taken off my head, guys! I do have a settlement figure, which will have gone down some as I've made another payment since. Was faced with trying to sell at very short notice and now I can relax, finish moving and terminate the agreement or settle up as I more calmly decide.

MrRedundant

VT's can and often are recorded - although it doesnt count as a default. It may put some people off lending to you on HP in future.

Laconic

I thought hard about that. If the worst that can happen is that I buy my next car with cash, that's a long way from the end of the world. If it affected my ability to get a mortgage, then that's a different can of fish... stinky lutefisk instead of tasty salmon.

stu12345_2

sell it private for a high price and get buyer to send a cheque to the finance company for the outstanding amount and one for you for your profit and then relaese the car to them