Voluntary Termination of Car Finance

JacktheLad_3

Hi,

I know this has been covered before, but my circumstances are slightly different to previous posts on his topic.

I got a brand new car on finance 8 months ago, but want to terminate the agreement. The finance is for 2 years and I have obtained a voluntary termination quote from citroen for £3687. Having looked at Autotrader, the car is worth at least £7500. Would I be able to ask the main dealer to buy it off me for say, £7000 and get them to pay the balance of my finance of £3687, leaving me with a profit of £3313, or does it not work like that?

Any advice would be helpful.

Thanks.

chalkie99

Think you are missing the point.

The termination fee is what they require to end the agreement. I imagine you pay that fee and hand the car back - you don't get a cheap car.

JacktheLad_3

I thought it was too good to be true!

I'd just heard of people selling cars when they already had finance on them and wondered if i could do the same with mine.

Thanks for the reply.

rs65

You need to ask for a settlement figure, and see how this compares to the current value.

Apples2

Brand new car 8 months ago and only owes 3600?

I think you have a shock in store

chanz4

double it and thats what you owe

jak_younger

hello there. i have a question or 2.
i have a car on finance but i was made redundant so i had difficulties keeping up with the payments.
the car was £4800 but after i signed the agreement i found out the price was £12,000. i asked for the ppi & gap year to be taken off so they done that & told me the agreement was then £6,000. i then asked if i could get my payments lowered to be able to keep up the payments. they agreed but without my knowledge the agreement went back up to £12,000. every few months i had to get new rubber bushes all round so i ended up falling behind on payments. i then agreed to pay a little more than my monthly agreement to pay off the arrears. i got a statement through the door to see that they had put my arrears in a seperate account & i was now getting charged interest on both my finance agreement & my arrears so the amount i was paying extra was not lowering my arrears because of the interest they were charging me on the arrears.
is this legal ?

it has now been 3 yrs since i got the car & i have spent at least £1,500 on repairs that keep arising & eventually i was told by a garage that it had been in an unregistered accident before i bought it then fixed privately & sold. i was even shown the proof which was the tiniest bits of paint work on the mirror & plastice strip along the drivers door. i was not told about this so i asked for a voluntary termination. i was told to send it in writing which i did do. i then got a phone call saying that because i had arrears outstanding they would not accept a voluntary termination & now i had to send in writing that i wanted to voluntary surrender the vehicle & i would have to pay the full amount outstanding too.
is this true or can i still voluntaryly terminate the agreement ?

bris

No, VT is only possible if you have kept to the original terms, since you have arrears it is no possible to surrender the car.

Muggles2012

bris wrote: »

No, VT is only possible if you have kept to the original terms, since you have arrears it is no possible to surrender the car.

I have written to my car finance company (Fortis Lease) with the standard letter of Voluntary Termination of Agreement. I'm almost at the 50% point, and upon sending the notice, have not been able to pay this month's car payment.

They have sent me the following letter;

Dear ....

I write with reference to your recent request to Voluntarily Terminate your Hire Purchase Agreement.

In accordance with your rights under the Consumer Credit Act 1974, to reach half the amount payable, you would be required to pay £375.55. Please either forward us a cheque for the above amount or contact us by telephone to pay by debit or credit card. Once this has been received, we will forward you the Voluntary Termination Form to sign and return.

If you decide not to Voluntary Terminate please put this in writing to us, thereafter, the Agreement will continue as normal.

etc.

The original loan was £18.775 at 7.7%, and the balance at the beginning of the year was £9435, so they may be correct in me being some £50 (+interest short of the 50% mark). The £375.55 is the value of the missed payment from the end of last month. Can Fortis Lease refuse me my right to VT until I clear this arrears payment? My understanding of Section 99 is that I can terminate at any point during the Agreement, and that these arrears are encompassed within the formula calcumation in Section 100 once they assess the car and present me with a final bill.

LOCARS says....


Consumer Credit Act 1974
Section 99 of the Consumer Credit Act gives the debtor the right to terminate a hire purchase agreement, simply by giving written notice of termination. The right to terminate applies at any time before the final payment becomes due, unless the creditor has already terminated. Contrary to the line taken by many finance companies, the debtor need not have paid half the total amount payable, and nor do they have to pay any arrears, before exercising the right to terminate.
Sections 99 and 100 set out the debtor's liability on voluntary termination. The sections are complex, but their main effect can be summarised in brief as follows. If the sum of payments made and arrears before termination exceeds 50% of the total price, than the debtor is only liable to pay the arrears. Otherwise, the debtor is liable to pay half the total price, less any payments already made.

Also, are Fortis Lease able to refuse my right to VT and then issue a DP notice for the arrears and thus force me into the position of owing them far more money than is set out in Section 100?

I've Googled and I can't find an entry on any of the usual advice forums from people being asked to settle arrears prior to a finance company accepting VT, so I hope someone here with experience, or the legal nouse might be able to advise me how to deal with this letter and progress the VT, hopefully before the company issue a Default Payment Notice for this arrears payment.

Thanks in advance, even if you just read me post.

Muggles2012

Update on the above....

National Debtline are quite clear in their opinion that the finance company cannot prevent you from VTing your vehicle if you have outstanding arrears, or until you pay the 50%. Their opinion is that you exercise your right and that all monies owed under the calculation in Section 100 become an outstanding unsecured loan. That appears to be in line with that LOCARS post on their website.

However....

Consumer Advice say that if you have an arrears payment due, or if you have not reached the 50% point, you are in breach of your contract UNTIL you pay the balance, and only once you have settled that balance are the finance company obliged to accept your request to VT your vehicle. This is in line with 'bris' post above, but appears to be in conflict with the Consumer Credit Act. Furthermore, they were unable to refer me specifically to any clause within the Act that confimred this, nor were they able to explain why the formula in Section 100 of the Act and its example in the Appendinx to the Act bot allowed for calculating in arrears.

I imagine this is a case where the finance company are tasitly given the right to choose how they wish to interpret the law, and this also opens me up to the finance company refusing my VT and pursuing me for the arrears (and therefor removing my rights to VT) before I am able to raise the funds to pay the arrears payment.

Does anyone here have experinece of this? I cannot believe I am the first person to experience this bind, but I've read a lot of blogs and threads and cannot find any that deal with this issue. Does anyone have any legal experience on this?

Apples2

Muggles2012 wrote: »

I imagine this is a case where the finance company are tasitly given the right to choose how they wish to interpret the law, and this also opens me up to the finance company refusing my VT and pursuing me for the arrears (and therefor removing my rights to VT) before I am able to raise the funds to pay the arrears payment.

I think you are entirely correct in this statement.
I have no first hand knowledge but have read many posts on here where the Finance Company have held the position that once defaulted, the contract is void and thus, there is no longer an option to VT the car.

I wish you luck but feel you may have a fight on your hands. Please keep this post updated with your progress.