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Cancelling Hire Purchase half way through agreement?
Comments
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p.s. Should this strange situation above be correct, I expect your credit rating will be shot.
No more cars on HP or lease agreements, credit cards, mortgages etc etc. You have defaulted on a loan.
I have done exactly this on two cars I've had, once I had paid 50% of the value of the agreement I contacted the Finance company and told them I wished to hand the car back as per the clause in my loan agreement. For the record I had no issues in getting other finance afterwards either.
It was not a default as it was a clearly stated option in the terms and conditions of the loan agreement the finance company wrote and I signed and agreed to.
It is up to the loan company as to whether they offer that clause, I have seen other loan agreements where it does not appear.
Birkee - the kind of ideas you are coming out with are similar to those that car salesmen come out with when they are calculating the trade in price they would offer you in order to "clear the finance on your car", I often wonder if they just surrender cars to the finance companies in this way.You return a wreck, you pay to restore it to original condition.
The goods have also been devalued by added mileage, so I query whether the above refers to cars. Have there been any test cases? This otherwise, seems like a cheap way to rent cars. Can't believe the lenders will accept this exposure to loss.
The finance companies allow for depreciation, if you returned a wreck you, quite rightly, would have to pay to restore it, but not to original condition, you would restore it to what would be considered reasonable for a car of that age.
The cars I returned were by no means minters, but equally they were not badly treated bangers, I didn't have any problems.0 -
Thank you for this, i simply knew that it would not destroy your rating. I had no idea on the overall affect on scoring...
It is simply recorded as a VT on your file.
It is recorded so that other companies can be warned that you have the cheek to wish to avail yourself of your legal rights, hence they label you as a PITA with the addition of VT on your file.0 -
It is simply recorded as a VT on your file.
It is recorded so that other companies can be warned that you have the cheek to wish to avail yourself of your legal rights, hence they label you as a PITA with the addition of VT on your file.
Is this also the case if you don't pay the final payment on a PCP agreement?
(might also add that I know someone who did this on HP and then took out finance for another car with the same finance co with no issues)0 -
Oh, and don't forget, you can't hand the car BACK to the finance company, as THEY didn't sell it to you!
No, the dealer sold it to the finance company, you are not the owner till you have completed the finance agreement and paid the option to purchase fee.
You are not handing it back to an unknown 3rd party, you are giving it back to the owner, and the only holder of the cars legal title.0 -
Is this also the case if you don't pay the final payment on a PCP agreement?
(might also add that I know someone who did this on HP and then took out finance for another car with the same finance co with no issues)
You mean the balloon?
No, I don't think it makes much of a difference in the case of a PCP, as you have completed the full agreement, but simply chosen not to buy the car for the guaranteed future minmum value.
Though as most cars are worth a bit more than the final payment then I think it is rare for somebody not to either refinance the balloon, pay it off in full or trade-in.
Most of the PCP deals I have looked at value the car fairly low, hence there is enough equity to put down on the next car on a PCP, dealer then repeats ad infinitum.0 -
I'll more than likely be selling the car to the trade to pay off the payment and pocket any equity, they have indeed valued it quite low.0
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p.s. Should this strange situation above be correct, I expect your credit rating will be shot.
No more cars on HP or lease agreements, credit cards, mortgages etc etc. You have defaulted on a loan.
I take it you have little experience of such things.
The situation may seem strange to you but has been the norm for the best part of 40 years.
Defaulting is very different to handing back under the terms of the agreement.0 -
I'll more than likely be selling the car to the trade to pay off the payment and pocket any equity, they have indeed valued it quite low.
If the car was reliable I would be tempted to just buy it, then sell it off after another year or so.
You have then financed a car on low payments for the term of the agreement, then bought a car for less than it is worth and got another few years out of it.0 -
If the car was reliable I would be tempted to just buy it, then sell it off after another year or so.
You have then financed a car on low payments for the term of the agreement, then bought a car for less than it is worth and got another few years out of it.
Thing is at this end of the market the difference between buying the car or just financing another for 3 years is only a few hundred quid - so you spread the payments and are always driving a < 3 year old car.0 -
Although, I have heard it will harm your chances of getting another car on HP as they do not like voluntary terminations
I agree & have voluntarily terminated an HP agreement on a car about 6 years ago - maybe just lucky but have had no problem since getting loans, credit cards etc and have since taken out 2 HP agreements on new cars (at discounted rates) with no problems0
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