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Help! Negative equity and change of contract
Pixie_girl
Posts: 5 Forumite
in Loans
Hi all. I was hoping someone could help me. I had negative equity on a car and the new car company I was hoping to buy from wrapped this negative equity up into a business hp agreement (not personal as per my previous agreement). I signed this unaware that this was a different contract and that I effectively signed away my consumer rights. I know I should have read the contract thoroughly but I didn't and was in a rush to buy the car. Also I didn't realise that I got such a poor deal on my old car and the negative equity wrapped up in the new deal was 10k! I'm now owing the 10k and I can't settle early without paying back ALL the interest on the new agreement (18k!) as they don't recalculate interest under business contracts. Please help. I feel I've been well and truly screwed.
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How recently did you enter the new contract?
Does the business contract have a cooling off period in the terms and are you within that period?
If not then I expect you will be stuck with the contract.
Did you sign a sales invoice to sell your old car to the dealer, presumably this mentioned the price they were giving you for it? Even if you didn't read the whole contract, it would surely be difficult to miss the sale price on the old car?A smile enriches those who receive without making poorer those who giveor "It costs nowt to be nice"0 -
Thanks for the quick reply. I wasn't aware of the gap between the price they gave me and the old settlement figure but I know thats my problem and I was foolish (although I now understand that that companies are not allowed to finance a car with negative equity as part of the agreement and inflate the sales price of the car to reflect that (although not sure if this applies to company hp agreements?)). Mainly I am concerned as they effectively tricked me and took away my rights as a consumer. I should also add that the delivered the car before I signed the paperwork so felt I had absolutely no choice but to sign as I had no other finance for the car I'd been driving around in!!0
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Did you not know it was going to be a business agreement before you took delivery of the car?
Is the invoice in your businesses name?
What paperwork had you had or signed before you took delivery of the car?A smile enriches those who receive without making poorer those who giveor "It costs nowt to be nice"0 -
Hi - I'd signed nothing before I took delivery of the car and I wasn't aware it was a business contract although they did ask if I'd use my car for commuting and I said just to drive to the station and back. The car is in my name not the companies....0
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How recently did you take delivery on the car?
How recently did you sign for it?
When did you first notice that it was a business agreement?A smile enriches those who receive without making poorer those who giveor "It costs nowt to be nice"0 -
Hi - it was signed 18 months ago and I noticed after six months when I came to sell the car and filed a complaint which is still not resolved. Thanks for your help.0
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I was puzzled reading the first post how you came to be £10k in negative equity on the first car.
It's not unusual to owe more than the car is worth but that is a huge amount.
Until I came to your last post. What on earth are you doing trying to sell a financed car after only 6 Months?
Seems like you are repeating the same mistake you made on the first car.
Even if it had not been a Business Contract, you would have faced a HUGE sum to get out of it early.0 -
Business "contracts" are non-regulated agreements and are not covered by the consumer credit act. These are for limited companies and partnerships with 4 or more partners.
However, an agreement can be non-regulated if the vehicle/asset is being purchased predominantly or solely for business use (there will be a specific section on the contract where the customer will attest to this). The agreement can also become non-regulated if the customer is a high net worth individual.
There is no cooling off period related to business "contracts".
A number of points to note:
1. OP must have been aware of the negative equity in the previous vehicle.
2. OP will be acutely aware of the price of the new vehicle as well as precisely what the negative equity being carried into the new agreement was by simply deducting the amount being financed was and the price they were paying for the new vehicle.
3. Companies ARE allowed to include the negative equity from previous vehicles into the new contracts, this is done all the time. The customer is aware of this, the lender simply agrees to how much they will advance on the new vehicle. In fact some lenders will show the negative equity being carried forward on the new agreement even.
4. The OP knew full well there was negative equity being carried forward, they also knew that it was being financed in the "business", what they did not realise is that there was not the same early settlement terms afforded to business finance agreements.
In my experience the lender will give favourable settlement figures on business finance agreements, subject to "new business", so the end user will need to purchase the next vehicle through the same provider but they may not be inclined to carry forward the negative equity again, which would just compound the problem.0
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