The Halves & Thirds rule for returning a financed car?

JustinM_2

I have a car that that is financed and the contract ends in August with a balloon payment due on top, the balloon will out weigh the value of the car which I am not pleased about as I now realise that the finance company took me for a bit of a ride :mad:

However, I have been told by a friend that there is some ruling brought out by the government called "Halves & Thirds" or something like that. This apparently allows you to return the car to the provider/finance company without any extra charges and this can be done at anytime as long as you have either paid a half or a 3rd of the value of the car.

I am a little bit confused about this and do not know all the facts..

Please can anyone enlighten me on this issue?

Many thanks

Justin

mancitychick

Have you read through your finance agreement? In my experience the contracts that require a balloon payment at the end normally give three options when they reach the end;

1) Pay the "balloon figure" and the car is yours.
2) Part exchange the car for a new one.
3) Hand the car back and as long as it is in good condition your contract ends with nothing more to pay.

Also in your agreeement it hsould explain about handing the car back when you have paid half the amount, but this is normally half the total amount including the balloon figure. I think the "thirds" bit refers to them repossessing it, don't think they can once you have paid a third.

Cazza

These are protections available to you under the Consumer Credit Act. They mean that once you have paid 1/3 of the amount due under the finance agreement, they can't repossess the car without a court order. Once you have paid half the amount due, if you no longer want the car, you can give it back to the finance company with nothing further to pay.

This only applies to the type of finance you get from the dealer, so if you take a loan from your bank, then go and give the car dealer cash, it doesn't apply.

The balloon payment makes it a bit more complicated. You need to check your finance agreement for the bit that says "tatal chage for credit" or similar, this will include the total amount you need to give them, including interest and the balloon payment. If you have apid half of this amount, you can give the car back.

Just to warn you, finance companies really don't like you doing this, it costs them a lot of money and the will fight you! BUT, they can't put black marks on your credit history for doing it or anything like that at all. That particular company might be a bit offish about doing business with again in the future though, in case you do it again! Good luck!

JustinM_2

Thanks for the advice peeps.
When I rang the Jeep finance people and mentioned the halves and 3rds thing they did actually say that it would mark my credit and possibly cause me problems somewhere down the line if I ever wanted to get finance etc..if I took this option and they also said that I would need to write in for them to have a look at my case.

Yestarday i did receive a letter from them that basically said what Mancitychick mentioned.

1) Pay the "balloon figure" and the car is yours.
2) Part exchange the car for a new one.
3) Hand the car back and as long as it is in good condition your contract ends with nothing more to pay.

I will write to them and let you know how it goes.

Thanks again

Justin

mancitychick

I returned my car to Citroen at the end of the agreement (option 3 above) and it didn't have a knock on effect on my credit history. However I have never returned a car under the "halves" rule.

Kilty_2

My father returned a car under the "halves" rule in a car finance agreement, it does not affect credit rating in any way.

nomoneytoday

There a 2 ways to record it - voluntary surrender and voluntary termination.
One hurts your record, the other is disliked by finance companies, but they can do zip about it..

JustinM_2

Just to let you know I have succeeded with this one and because I have paid over half the amount that I originally owed under the halves & thirds rule I can now give the car back with no further panalties etc.

ajaxgeezer

Well done Justin, I've been keeping an eye on this

I'm just wondering how the condition of the car affects the return of it, and who assesses whether it is returned in fair condition or not?

JustinM_2

Hi sorry for the late reply, yes Daimler Chrysler Jeep's contractors collected the car a few weeks ago and the bill I got through was for basically valleting issues, this came to just over £100 which i suppose is fair, I was worried about them making up problems to draw more cash from me but this didnt happen

mjt222

Does using VT affect your credit rating in anyway, I realise that finance companies might not "like" it, but does it add a black mark to your rating ?

For info mine is with Black Horse and I have paid more than half, however the car is now in ngative equity and so this seems the cheapest way out of the agreement.