Mercedes Benz Finance & 50% voluntary termination rule

Capt._Calculator

Hi,

I have a MB car on regulated contract purchase scheme, and have been on it since July 2009. If finished July 2013. I have now a new job and a company car and no longer need the car so I called them regarding a voluntary termination as is my right as I am just about to hit the 50% mark.

However they have told me that it would adversely affect my credit rating and would be seen by future credit applications. My understanding was that this type of ending to such a contract would not adversely affect your credit rating. I have a very clean credit rating and do not wish to see it tarnished but I also have a very swanky car that I no longer need.

Are they correct to say it will knacker my credit rating?

jonesMUFCforever

Can you not sell the car (paying off the loan of course)?
It might well affect your credit rating in the future.

Have you considered not taking the company car and getting more salary instead?

CDC2011

I've done a VT before and was told that it would go on my credit report but that it didn't necessarily mean anything either way - it all would depend on how an individual lender viewed my report.

I did find this frustrating as you can't 'explain' the VT in any way. We did it because we changed jobs and were doing significantly more miles per day. With petrol prices rising we wanted a more fuel efficient car and as the old one was 2.5 years old there were cheaper options available.

It was the right decision for us as we've saved on the petrol overall, road tax is cheaper and so are insurance costs. Whilst I still begrudge the credit mark I haven't experienced any problems that I've noticed.

Capt._Calculator

I have to take the car, no cash option offered so I might as well take it.

It is just sitting on my drive and will be for the next 15 months if I can't shift it. It's worth c.£19,000 which is what is outstanding but I was under the impression that if I exercise my right under the CCA to return the goods after paying half that this would not affect my credit rating as I am exercising a statuatory right as a consumer

bris

Yes, you can excercise your statutory right as a customer, and it theory this should not affect you. In practice however some lenders will see this on your file and decide not to lend to you, as is there right to choose who to lend to. Some will see you as a bad risk becuase you terminated the agreement, some may not, it's the chance you take the next time you need finance.

chezbo

My husband is going to be getting a company car yet he has a car which is currently on finance. He is just about to hit the 3 year mark of paying it on 7th April and this finance was took out over 5 years so he is half way through the contract. He wants to terminate the contract but is concerned that the car has a lot of mileage on it and a few scratches. Should we sort the scratches out before handing the car back? Will we lose out on anything? Is there anything we can do to keep a good credit score? And finally whats the process for handing the car back?
Thanks

MHO_2

I would definitely get the bodywork put right, they would charge you up to circa £500, and you could probably get it done locally for a couple of hundred, the mileage you can calculate using the excess mileage rate and proportion it.

Apples2

It only affects your credit file by having a VT Marker against the finance deal. You haven't broken any agreements but merely taken advantage of a known contract clause.

It MAY make another finance company think twice about taking you on as you are one of those minority who knows how to read the terms and conditions but it isn't realistic any company would reject an application, in case he bails out half way through.

Returning a sub standard car by way of VT (higher mileage, poor cosmetic condition) may end up costing as much as the remaining finance, they will charge the Earth for anything and everything.

MB has probably the worse reputation for ripping people off come the return date of HP Cars out of all the HP Lenders.

clarebear

So is it just a scare tactic then? They've just told me the same thing, but I did forget to ask, is it 50% of the total credit or 50% through the term?

Apparently it's not something that's done over the phone, it has to be done via letter etc.