Involuntary Termination Success Story

kev84

Hello All

This is my first post on the forum (hope its in the right place) and i hope its of use to someone!

I am 22, and I am wanting to save for my own house. I had a lemon of a car that i bought brand new from a dealer, and paid finance for over three years on a PCP plan. The monthly payments were quite high, so i decided to see if i could get rid. To my disappointment, the car after only 18 months was only worth £4300. I was going to pay back £9000 excluding the interest! A helpful garage salesman however said ,look into involuntary termination where, as long as you have paid 50% of the cars value, you can legally and are entitled to hand the car back to the finance company, with nothing more to pay. I though great ! I only owe £5900 (settlement figure), so i only had to pay 1 more month and that was 50%. I wrote a letter confirming that i wanted to do this stating vehicle reg mileage etc.

The car i handed back sucessfully, had a metre long scratch down the side and a couple of dints and tyres that needed replacing. None of this damage was taken into account, a man came and collected the vehicle from my home address and i never heard anything after that.

Effectively i had a trade in price of £5700. A word of warning however if you are to use this tip it has damaged my chances of getting car finance again, I got quoted a silly, astronomical 31% A.P.R when i tried to get finance 4 or 5 months later, for a £2500 car. I bought a cash car instead. This all happened earlier this year in March.

I don't know whether this is a well known fact of car finance, but it would, im sure, help some people who are struggling with their car finance repayments, and those who have suffered massive negative equity.

Anyone want anymore help i.e. with the letter etc or any questions please ask away.

Kevin

Currently claiming back bank charges -
First Direct = £217.50 letter sent 12/12/06
Barclays = ???? letter sent 12/12/06

saintly_2

i did that with my 1st car that i had on finance, I didnt know you could do it until someone at a garage said i could.

well done!!

yung

taking time to read the small print does help sometime. word of caution about PCP Plan if at the end of the term you return the car some company will expect you to pay and claim off your insurance for any damage to make the car saleable.

kev84

The finance company i dealt with was International Motors Finance Ltd, who provide finance for all cars mainly subaru and isuzu. I was just waiting for a letter to pop through saying 'you owe us x amount for damage', but none turned up!!

Kevin

Cazza

I believe the rule they use with this type of Motor Finance is called halves and thirds. Basically, once you've paid a third of the total amount repayable under a finance agreement, they can't repossess the car without a court order. Once you've paid half, you've got the right to had back the car in lieu of the outstanding payments.

The bit to keep an eye on is that it's a half and third of the total amount you need to pay back, nothing to do with the value of the car. So, if you borrow £10,000 and the interest charges are £1000, you can give the car back once you've paid £5,500.

With PCP deals, you get the halves and thirds thing but there's also an amount the finance company will guarantee the car will be worth at the end of the finance agreement. If the car's worth less than this, you give the keys back and walk away.

Finance companies tend to advertise the guarantee with the PCP deal quite a lot, but the keep very quiet about the halves and thirds rule because it costs them a fortune! They will try to wriggle out of letting you do this, but they don't really have a leg to stand on!

As far as getting more car finance is concerned, it shouldn't have any impact on getting finance again. That individual company might not be too keen on you, but it's simply not possible to put anything on your credit history to say what you've done!