Any advice please re Hire Purchase agreement on a car??????

Chrismojam

Hi All,

My friend has a HP agreement on her car...one of those where you pay for it for 3 years then hand it back in and get a new car ...and carry on paying for that......

She's had the car about 18 months or so.....however, now she is going to me emigrating to America....probably in the next few months as it all seems to be going quite fast!

She is now worrying herself sick over what's going to happen with the loan for the car. She knows she is going to have to hand the car back when she goes but she needs it in the mean time to get to and from work. She is worried what the loan company are going to say that she owes.....she already has a loan with the ex husband....a joint one...which she is paying her bit..and he seems to be arsing about (head in the sand job). She is prepared to carry on paying that one when she is in the US.....but she know's she is not going to be able to manage both of them.

Any advice? I haven't got a clue about this kind of thing...having never done a driving lesson yet! Thanks in advance

jonjamie1970

You need to speak with your friend, shes taken out in good faith with a finance company to buy a car over three years, to be honest there is no such deal as a pay it for 3 years and then get another one, that would be seperate deals. She is on a balloon payment which means at the end of 3 years she will owe them a pre defined X amount. She can either pay X and keep the car or refinance a new car.
However, there is a possibility that at this point she has paid close to half the amount of the loan and could hand it back under the finance rules, this can be greatly affected by the ballon payment though as this needs taking into account. So.....

1. Dig out the paperwork and see what it says about the halfs and thirds rule.
2. Find out the balloon payment and the total amount owed at the start of the agreement including interest and balloon.
3. Find out how much she has paid already, exactly.

chalkie99

Chrismojam wrote: »

My friend has a HP agreement on her car...one of those where you pay for it for 3 years then hand it back in and get a new car ...and carry on paying for that......

First thing, check exactly what sort of agreement it is. This sounds more like a PCP agreement so what she is liable to pay might be very different.

Chrismojam

For the replys so far guys Mate thinks she may have shredded the paperwork!!! Jeez, she doesn't realise she is living with an ex accountant! I've got paperwork older than some members of my family! I don't get that..but then she has been shredder happy...getting ready for a new life in the US...so I guess clearing everything is part of that?!

I've told her to get copies of the paperwork from the dealership....before telling them anything...I've said that to give us a chance to work out what the/any payments should be before they blind her with science...that and I want to get to Alton Towers again before she gives up the car! lol! and of course she needs it for work....

I will be back for advice from you all! I'm sure you all have much more experience of all this than me! Thanks again x

Chrismojam

Hi, my friend found some paperwork....well, the one that says conditional sale agreement...not sure if there should be any others...it was with Santander via Mazda..

The paperwork says:

The total amount payable of 36 months is £10714.06 (made up of amount of credit £8399; advance payment £1200.00; interest £1115.06)

The agreement says 'you must repay the amount of credit and the total charge for credit by 36 payments each of £150.71 payable 1 month after the date of this agreement, followed by 1 payment of £4088.50 payable 37 months after the date of this agreement.

Not sure what type of agreement this is? Any ideas? How would we work out what she is likely to owe? I used to be up to scratch on all the small print, but it's been years since I've had any loans..

Any help greatly appreciated

Chrismojam

Please............:D

chanz4

sounds like a pcp as it has a balloon payment

paddyrg

Quite a hefty balloon payment at that. I think this is going to be a messy time for your friend, check the smallprint, but I can see the finance company may be awkward - after all the depreciation is faster than the payment schedule so they need all the payments to recover their money.

KingElvis

Yep, sounds like a complete mess and one which is going to be hard to get out of unless you can find a hyper reliable person to carry on the payments while she's gone.

The ballon payment is sizeable so the deal was obviously one of the want by the buyer and throw in the figures by the salesman...I wish people would take a few hours for the size of these amounts to sink in beofre they sign these grubby agreements.

Good luck though.

Chrismojam

Thanks for the replies guys....I'll let her know. I think she is going to need to go to citizens advise or something....I might look up a bit more about these types of agreements...I'm sure there will be something on here somewhere....is there anywhere that shows you a formula to work out the payments/whats owed etc????