Mis-sold hire-purchase agreement

mcnultyj

Hi, my father has recently passed away and I am now going through this loan agreements. One in particular which has made me furious is the one on a car he purchased in March 2006. I was present at the time and can vouch for this.

We were offered a flat rate loan to purchase the car at 2.5%, and we were told at the time that this is better than most savings accounts and we shouldn't use his savings to buy the car, but to use the company's financial services instead. This sounded like a good deal, so we took up the offer.

I am now sorting the loan out and found out the APR is 6.4% not the 2.5% as advertised, so based on their advice we took out a loan we didn’t need to.

What can I do to recoup the cost of setting up the loan and the interest paid as this was mis-sold?

Thanks for your help in advance.

magyar

It's the old "flat rate", which car salesmen prefer to use vs. APR. They're totally different means of calculating interest. There's an MSE thread here, and a definition here. Essentially, flat rate is the effective interest rate paid over the total term of the loan, whereas APR takes into account the reducing balance.

You might have some mileage (excuse pun) in them having said 'this is better than most savings accounts' as that's clearly wrong, but it's hard to prove this.

mrcow

I doubt you are going to get far as the paperwork clearly states the APR.

Good luck complaining anyway, it's worth the price of a stamp. You need to get a settlment figure on this loan too, so check out what (if any) penalties they are sticking on top too.

Really sorry to hear about your Dad. It must be so hard to go through all his affairs, especially at this time of year.

Take care.

dunstonh

I agree that getting any success from this is unlikely as the agreement would clearly state the percentage. Plus the contract was signed by your Father, not you. Any complaint made would have to come from the executor of the estate as he/she is the person that the company is legally able to discuss things with.

mcnultyj

Thanks - all your comments are very appreciated. I have read the hire-purchase agreement with a fine tooth comb and I cannot find the APR on it at all. There is a section called finance details and it just states the interest charges in pounds not %.

A very, very long shot: There is also a declaration which states that the person would be under 65 at the end of the agreement, but my father was 66 when it was signed, and not in full time employment, but retired.

Thanks again for your help

James

mrcow

The APR should be stated on the paperwork under the terms of the Consumer Credit Act. What you have posted additionally is also worrying. Good luck with your complaint. Please let us know how you get on.

magyar

mcnultyj wrote:

A very, very long shot: There is also a declaration which states that the person would be under 65 at the end of the agreement, but my father was 66 when it was signed, and not in full time employment, but retired.

Well, that declaration is presumably there to protect the lender rather than the borrower, so yes it's a long shot.

You may try writing to the dealer and explaining the situation and requesting a goodwill payment equal to the interest you are paying them minus the interest you would earn in your father's savings account.

One final idea - can the loan be paid off early? If there's cash in the bank then just settle it. There may be an early settlement fee, but if it's less than you're losing in interest, it's worth it.

What does the contract say will happen in the event of one party's death? (Sorry, I realise this must all be very hard).

mcnultyj

Hi - we were told there are three options in the event of death (I have to admit the person dealing with us, has been fantastic and very understanding):

1. Pay it off in full
2. Sell the car privately
3. Transfer the agreement to someone's elses name

Because we honestly thought that the rate was 2.5%, I wanted to transfer it to my mothers name. We were offered to extend the length to help us out. It was only when I asked what the APR is, that I was told the orginal one was 6.4% and the new one would be 8.6%. I was shocked. The documentation I have must be incomplete, as there is nothing which says Conuser Credit Act, simply:

* Your details
* VAT details
* Discolsure and use of personal information
* Description of Vehicle
* Finance details (all in £'s no %)
* Payment protection
* Declaration
* Signatures

Because we had the money all along, (were lead to believe we would earn more interest in our savings account than we would be paying off the loan), I am paying off the outstanding amount in full.

I have found out that the interest payment + fees, ect are approx £1200 - in my opinion this is daylight robbery.

mcnultyj

to add:
It is an unregulated credit agreement, and therefore doesn't have the APR displayed.