Voluntary termination of HPA - What goes on credit file afterwards?

Bakeybadoo

We are voluntarily terminating our car HPA. It's going this month.

What will go on our credit file? I'm assuming (hoping!) they won't bother to chase us for the outstanding and so what can we expect to be put down?

Can we ask for something in our favour to be put down? I'd rather not wait 6 years for it to fall off the system.

chevalier

Not sure why they wouldn't pursue you for the rest of the money you owe just because you give the car back?
I would not presume they will consider the debt settled.
If you have problems paying, then it is perhaps best to speak to the CAB, and see what they advise.
chev

DavidHM

Bakeybadoo - I presume that you have already paid more than 50% of the total credit price and owe more than the car is worth. If so, you need to inform them that you are not selling the car back to them but are exercising your rights under the Consumer Credit Act 1974 (ss.99 and 100). If you do, you are paying off the loan, just as if you'd given them a big sack full of cash equal to the outstanding amount.

Chevalier - they won't pursue it because there is a term under s.99 of the Consumer Credit Act 1974 that says that anyone has the right, when they have paid more than 50% of the total credit price (i.e., (the deposit + payments made so far) is more than half of (deposit + all payments including interest)) to hand back the goods subject to the agreement and settle the debt.

Because the term is implied by statute, it cannot be excluded in the contract. Finance companies have tried to pursue people in the past but have been slapped down at all levels by the courts. Instead, all the debtor is doing is exercising an ordinary contractual right and the finance company has to accept that, just as the seller has to accept paying interest.

To be honest, if you borrow money sensibly, at a sensible rate of interest over an appropriately short time, and buy the right car at the right price, you won't actually be better off for exercising this right - but once you're in a bad position it can be a good way out.

It exists to protect people from extortionate bargains and whilst it might be more common than the people writing the law might have imagined, the fact is that for every person who exercises that right, many more have been put into a position where they might be better off doing so - which is profitable for the finance company and the supplier of the goods. Those that do hand back are just part of the overall cost of doing business.

Hope78

I know someone who works in the car trade and under Scottish system what happens is you are half way or more through term of HP you are entitled to hand it back end of its called a voluntary termination. He was advising a friend of mine on this and it didn't affect on their credit rating though it is noted on file as voluntary termination. The finance company sent an inspector out to look over car and charge any damage scratches even little incidental ones but the person I know stuck to their guns and said this is under normal weara and tear so they didn't have to pay anything but apparently some of these guys can be quite tough. Also company will more than likely say you're liable for enxt months pay but frined of mine said no I've paid more than half the payments so I'm cancelling direct debit with immediate effect.

I'm not sure if this will be same under English law but check your HP agreement.

CLAPTON

good to read this government site about HP debts

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/DG_10013226