Hire Purchase and Total Loss

edited 1 March 2016 at 2:02PM in Loans
6 replies 3K views
TonySopranoTonySoprano Forumite
44 Posts
edited 1 March 2016 at 2:02PM in Loans
Official MSE Insert March 16:

We've a fully researched Cheap Hire Purchase guide you may find helpful.

Back to TonySoprano's original post...


Hi Some Advice if I may

My car has been written off by my insurance company and they are in the process od settling the claim I am awaiting a settlement figure

I read in my agreement that the hire purchase agreement terminates automatically where a car has been declared a total loss

Is anyone able to explain what generally happens in cases such as this?

Replies

  • HappyMJHappyMJ Forumite
    21.1K Posts
    ✭✭✭✭✭
    Hi Some Advice if I may

    My car has been written off by my insurance company and they are in the process od settling the claim I am awaiting a settlement figure

    I read in my agreement that the hire purchase agreement terminates automatically where a car has been declared a total loss

    Is anyone able to explain what generally happens in cases such as this?
    You stop paying for the car. The insurance pays the HP company and that's it. Any shortfall you do pay for but if you have the correct insurance there should be no shortfall.

    You then go out and buy another car on a new HP agreement.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • Hi Some Advice if I may

    My car has been written off by my insurance company and they are in the process od settling the claim I am awaiting a settlement figure

    I read in my agreement that the hire purchase agreement terminates automatically where a car has been declared a total loss

    Is anyone able to explain what generally happens in cases such as this?

    I take it you took out Gap insurance
  • edited 29 September 2013 at 12:45PM
    TonySopranoTonySoprano Forumite
    44 Posts
    edited 29 September 2013 at 12:45PM
    HI Thanks for the reply that's what I thought but under the hire purchase agreement there were 6 payments left I presume the finance company will want that as well as the final balloon payment? so the remaining six months is still payable which ever way you look at it? less of course I presume some interest rebate?

    Also I presume they (finance company) cant initiate any notice clause i.e 3 months notice to terminate ect ect

    In a nutshell Car Loan was 10500, Deposit £2000, Total Repayments so far £4200 Im assuming they will want £4300 less an interest rebate as a rough guide?

    What I mean is can they start lumping charges on for early termination, admin fees and all that milarky?

    Sorry should mention the total interest is included in the £10500 figure above
  • You-kip wrote: »
    I take it you took out Gap insurance

    Thankfully yes on the insistence of the dealer and apparently the best type i.e accounts for increases to replace with a brand new like for like the car
  • HappyMJHappyMJ Forumite
    21.1K Posts
    ✭✭✭✭✭
    HI Thanks for the reply that's what I thought but under the hire purchase agreement there were 6 payments left I presume the finance company will want that as well as the final balloon payment? so the remaining six months is still payable which ever way you look at it? less of course I presume some interest rebate?

    Also I presume they (finance company) cant initiate any notice clause i.e 3 months notice to terminate ect ect

    In a nutshell Car Loan was 10500, Deposit £2000, Total Repayments so far £4200 Im assuming they will want £4300 less an interest rebate as a rough guide?

    What I mean is can they start lumping charges on for early termination, admin fees and all that milarky?

    Sorry should mention the total interest is included in the £10500 figure above
    Thankfully yes on the insistence of the dealer and apparently the best type i.e accounts for increases to replace with a brand new like for like the car
    Then you have nothing at all to worry about...all the interest and fees charged to your account will be covered by the gap insurance.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • Thanks for that

    I called the finance company today and I was a bit perplexed the chap at the call centre was a bit taken aback when I mentioned the terms stated that the agreement is terminated when a total loss occurs

    he confirmed whilst the assett is terminated the agreement stays in place and I continue the monthly payments until the account is settled.

    Strangely enough he also stated any cheque received from the insurance company that does not match the settlement figure at the date of receiving the cheque will be returned ! So they are not prepared to receive an overpayment and return the difference.

    I got the impression they did'nt really care so now I will have to co-ordinate the insurance company issuing the correct amount given that the monthly installments will continue until settlement
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