Voluntary termination

crawfyssj5

Hi, I am with finance company Motonovo and over 50% through my agreement and wish to hand the car back as it's worth less than what's less to pay on the finance and it costs a fortune to run (Mazda RX8). My settlement figure is around £2200 but not getting anywhere near that for a private sale so I was thinking about Voluntary Termination. I heard that a VT is added to your credit rating if this happens... I was wanting to know how bad this would be? for instance is it only Motonovo that I might have difficulty trying to get finance with on a car or is it all finance company's that I would have an issue with? also does this have any other impact on any other purchases that I make on finance... i. e. Mortgages, electronic goods,furniture etc.

In addition my main question is about the interest on the finance. I have noticed that the settlement figure is £2200. When reading through the contract I noticed that there was a lump some of interest added to the finance of £495 over the term of the 3 years. If I was yo voluntary terminate shouldn't this be a 3rd? Thanks in advance.

Nearlyold

A Voluntary Termination does not usually have much effect on your ability to get credit in the future, at worst it might make a lender reluctant to offer you HP again.


"In addition my main question is about the interest on the finance. I have noticed that the settlement figure is £2200. When reading through the contract I noticed that there was a lump some of interest added to the finance of £495 over the term of the 3 years. If I was to voluntary terminate shouldn't this be a 3rd? "


Not really sure what you are asking here, when you VT you simply have to have paid 50% of the total amount payable under the agreement including all the interest but also taking into account any deposit. There is no interest rebate as such.


Perhaps you could provide all the figures i.e. amount originally borrowed, monthly payment, interest rate as this might shed some light on your interest query

crawfyssj5

Thanks very much for your reply. here's the figures:

deposit £1000
part ex 750
total amount of credit 3000
administration fee 199
interest 495
optional option to purchase 159

Is the interest based on the 3 years? or should this be based on how long I have had the car? If I VT then shouldn't I only pay the interest of the 1 year rather than 3 since I'm only using the car/hire for 1 year. Hope that clears it up... cheers again

Nearlyold

crawfyssj5 wrote: »

Is the interest based on the 3 years? or should this be based on how long I have had the car? If I VT then shouldn't I only pay the interest of the 1 year rather than 3 since I'm only using the car/hire for 1 year. Hope that clears it up... cheers again

Ah I see what your getting at.


Your settlement figure would include a reduction in interest (though its not a 2/3rd rebate because you pay more interest at the start of the loan than the end)


There is NO reduction in interest if you VT - you have to have paid 50% of the total amount payable under the agreement including all the interest that would have been payable over the term of the loan - sorry but that's just the way it is.


If it makes you feel any better remember you are asking the lender to take the car back when you already know the car is worth less than the amount you still owe - so the lender is going to lose out.

SeanG79

As mentioned above, when you VT, you simply hand back the car and have no further liability (provided the car is in good condition for a vehicle of its age and mileage). There is no rebate or anything like that, VT was intended to protect the consumer against negative equity and encourage the finance provider to offer sensible advances.

Car finance providers don't like VT, because obviously they lose money every time this happens as the car is in negative equity else you would not go down this route.

The VT will have no impact on personal loans or mortgages. It may however make other car finance providers "nervous", you are still likely to be approved for finance, but the loan provider may ask for a larger deposit/shorter term, so that there shouldn't be a position where the next car will be in negative equity, to protect themselves against future losses.

crawfyssj5

Thanks for your help :-) been great

Geodark

David147 wrote: »

A termination of employment initiated by the employee or by mutual agreement with the employer in which a letter of resignation is submitted. In most cases of voluntary termination, employees will provide notice of their intent to resign to allow for a more orderly transition of responsibilities.

erm, did you read the post? VT relates to the HP on the car - not his employment!

Foxy-Stoat_3

Geodark wrote: »

erm, did you read the post? VT relates to the HP on the car - not his employment!

Dont worry about David, he is just trying to get his post count up so he can spam !