About Voluntary Termination (HP)

eddie864

I've just discovered Voluntary Termination from this site.

I was getting lower rate DLA and used the money to buy a "54" reg car on finance. Soon after I was awarded higher rate DLA and this entitles me to a Motability car with the benefits of new car reliability and servicing. The finance, insurance and servicing costs for the financed car are much more than my DLA payment and the cost of the motability car is covered by the DLA. As I'm disabled, money is tight.

The car was £2995 and I put a £200 deposit down so finance should have been £2795 but it appears on my statement as £3,044.00 (I assume fees). My statement reads:

Hire Purchase... £3044.00 - Charge for credit...£1536.04 -
APR... 41.1% - Term... 36months - Total Charge.. £4580.04

GAP... £395 - Charge for credit... £189.64 - APR... 31.3% - Term... 36months - Total Charge... £584.64

Breakdown Insurance... £292.00 - Charge for credit... £140 - APR... 31.3% - Term 24months

Total Agreement... £5,596.00

The agreement mentions early termination and I've already paid 15 payments of £153.38 and up to date. I guess I will be at halfway for the whole agreement by around Xmas and I want to do a voluntary termination. Car is good condition and has been serviced as per the agreement. What do I need to make sure is paid? Can I cancel the breakdown insurance and GAP insurance or do I need to pay these off completely first?

Thanks for any advice.

pompeyred

I'm surprised this hasn't been answered already but it may help others so I'll have a go.

You can voluntarily terminate the agreement once half the amount owed under the hire purchase agreement has been paid.

However, it appears from your statement of detail above that you took extra insurances which almost certainly WILL NOT be part of the hire purchase agreement.

So, once you reach halfway of the payments owed under the hire purchase part you can exercise your right to terminate the agreement but you will be liable for any amounts still owing under the non hire purchase part.

In summary, what happens is that the finance company will terminate the hier purchase side but you will have to pay the remainder balance of the insurances.... there will be less owing on the breakdown than there will be on the GAP but even once you get to the halfway point you should expect a further £4-500 payment to make in order to 'walk away'.

Here you have to be careful also.

If you terminate the agreement then the finance company may well offer you a period to pay the remainder balance over. For the privilege of doing so they may default you until the balance is paid and then they will mark that balance as settled.

If you value your credit record then make sure you ask what will happen and what they report.

jd1989

Hi, i VT'd my car 10 days ago, on the car check i had damages valued at £286 wich i paid when i recieved confirmation letter from finance company. 10 days later i have recieved another letter wanting £286 due to further problems! what do i do as the car has been checked in front of me at the auction? thanks