Car finance query

edited 30 November -1 at 1:00AM in Loans
8 replies 1.4K views
sockpuppetsockpuppet Forumite
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edited 30 November -1 at 1:00AM in Loans
Just trying to get advice for my friend, her husband acted as guarantor for their son to purchase a car on finance from welcome finance.
After about a year the son lost his job and couldn't pay the monthly payments. His dad wasn't able to pay them as he lost his job at the same time so they voluntarily handed the car back and were told they would just be due to pay costs for this, which would be around 800 pounds.
When they started to chase this amount all correspondence has been in my friends husbands name and never the sons ( who the car was actually purchased by)
They have never chased the son at all, only her husband.

When they spoke to welcome they said that the paperwork had been completed incorrectly at the car showroom and the husband had been put as first buyer and the son as second buyer which, they said, was the wrong way round as the husband was guarantor not the buyer.

The husband offered to pay 50.00 per month to clear the debt but received no response from welcome, they closed down the local office and two letters chasing the full amount had no return telephone number on it. They wrote to the address at the bottom of the page but again received no response.

They were unable to pay anything as they had no payment details and nobody to contact, they then received no further letters for about two years when they had contact from a debt collection agency chasing over 2000 pounds. This was again addressed to the husband, and not the son. (The son is therefore ignoring it all, as they are not chasing him and is happy to leave his dad to have to deal with it all and pay it off)

I was just wondering if anyone has any advice on how to deal with the situation? He had been willing to pay the amount but couldn't find out how to make any payments and has no idea how the amount has jumped up so much. They have said they will take him to court but before he makes any reply to the debt people he warned to find out the best way to proceed.

Am sorry if this is in the wrong place, wasn't sure if car finance came under 'loans' . He is so worried that his credit score is going to be trashed when he hadn't even tried to avoid paying but welcome have been impossible to deal with.

Any advice welcome

Replies

  • inmypocketnottheirsinmypocketnottheirs Forumite
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    If the husband has acted as a guarantor then he would be chased anyway f the son wasn't able to maintain payments.
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  • When they "voluntarily handed the car back" how did they do this and is there any written correspondence, especially regarding the amount due?

    How long was the loan for?

    If it's a Hire Purchase agreement they cannot voluntarily terminate the agreement until half the money has been paid and that seems unlikely if they ran into trouble after a year.

    The son sounds like a little charmer though.
  • TixyTixy Forumite
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    Before he agrees to pay the debt collection agency he should request a breakdown of the balance.

    He needs to understand how much was owed, how much the vehicle sold for, and what charges and interest have been added.

    He might want to start bu sending the DCA the prove it letter to find out this information. Suggest that they do everything in writing, don't phone the DCA.

    His credit file presumably already shows a default in relation to the debt so is arugably badly affected by this.

    prove it letter Letter when you know nothing about about the debt - AKA "Prove it" letter
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  • jelliejellie Forumite
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    I don't believe Welcome Finance did loans with guarantors. If they have a look at the original loan agreement, it will probably tell them they were main and joint account holders.

    When they said they wanted to hand the car back, presumably they got a letter confirming their outstanding liability before handing it over? If the loan was over 4 years, after only a year and with presumably missed payments, it's unlikely they only owed £800.

    There are contact details on Welcome's website, including an email address. They should contact them and query the balance.
  • jelliejellie Forumite
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    Tixy wrote: »
    He needs to understand how much was owed, how much the vehicle sold for, and what charges and interest have been added.

    If the loan was voluntarily terminated, how much the car was sold for doesn't affect the amount owed. That would only matter if the car was repossessed, or voluntarily surrendered.
  • jelliejellie Forumite
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    chalkie99 wrote: »
    If it's a Hire Purchase agreement they cannot voluntarily terminate the agreement until half the money has been paid and that seems unlikely if they ran into trouble after a year.

    The son sounds like a little charmer though.

    Yes they can. If they have paid up to half of the amount due, they can terminate without any further money owing. If it's before the halfway mark they can still terminate, but will still owe a further amount which they should have been told about at the time.

    I guess either way, dad didn't realise or bother to find out, what he was getting himself into.
  • sockpuppetsockpuppet Forumite
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    Hello, thanks everyone for your replies. Been trying to find out a bit more information.

    Welcome have apparently sold the debt on, and they have received letters from three different debt agencies, the latest of which is threatening court action.
    They have sent a 'statement' of the account which states the debt was written off sometime last year with a balance of zero. It actually states written off. Not sure who this statement is from, it doesn't state welcome on it but includes all details from the start of the agreement.

    I assume if the paperwork was so-say completed incorrectly then dad wasn't guarantor, but joint purchaser if they didn't do guarantor agreements. Dad said the term used by the salesman was guarantor so it appears he may have been advised incorrectly

    They were only a year in, they were aware of the termination point but neither could continue to pay up to that point so were not sure what to do. Son had payment protection ins on it, dad made sure just in case, but when son changed bank he didn't bother to move the dd, so it lapsed. Dad did not know he had done this until it was too late

    Yes the son is a charmer, debts all over the place at his dad's address but this is the only one also linked to dad's name luckily

    They have tried to deal with welcome again but apparently 'this is no longer their debt'

    I think dad just wanted to help his son buy a decent car so he could get a reliable job but has woken up now to the fact son is useless with money and will happily just leave all the debts. Unfortunately too late now.

    They have a form as receipt for the car being returned

    No dad's credit report does not show as a 'default' just a current agreement with a line of number 8

    They can't get any info from anyone as to how debt built, how much car sold for. They only have this statement showing a nil balance

    Should they contact the debt agency or just let them take it to court, if they actually do, and then appeal it??

    Everything is very confused
  • jelliejellie Forumite
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    The statement from Welcome shows that it was written off, because that's what happened when they sold the debt.

    How much the car sold for is irrelevant if the loan was voluntarily terminated. It will only matter if it was repossessed or surrendered. What figures were on the letter they got before they said they wanted to go ahead and return the car?

    As for paying whoever now owns the debt, that is for them to decide. What would their defence in court be?
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