Debt in someone elses name - Car finance

stefan127

Hi all.

Can someone point me in the right direction here?

My brother has poor credit so, stupidly, my sister agreed to take out finance for a car for him. The car broke down and the part (a turbo) wasn't covered in the warranty. He got it replaced twice and it kept breaking so he eventually part-exchanged the car and swapped the finance - side note, what's annoying is that a month after he got a letter to say it was a defect with the part and it would be replaced/repaired free of charge!

I recently learned that he is paying 3 finance companies for the car at £280, £88 and another £88 per month a month. The £280 and £88 are for the car itself but the other £88 is for the old car finance. The old car had 2 finances on it, one also being £88.

Basically, instead of swapping both the finance options over the dealer has swapped one and created a brand new one, leaving the other one in place. Sneakily it was kept at £88, which I think is to confuse the situation. They only knew when the payment came out twice. When they phoned the finance company - sorry, I don't know the name - they were told this was a "top up loan" for the old car and still needs to be paid. There's still £4,000 left to pay for it.

The dealer is a friend of my brother but he has screwed him over. On top of this I have massive doubts to how my sister managed to get approved for finance for £9,000 (it's for 4 years and by my calculations £280 and £88 per month for 4 years is over £17,000 so no idea what APR the finance is).

My sister is only a provisional driver and at the time she was unemployed. She said the dealer told her to say she was a manager in a pub! They asked for no proof of income from her. At the time my sister was claiming job seekers allowance but prior to that she helped in a kitchen in a pub for 3 hours a week so there was absolutely no indication she could afford these repayments.

The car and the finance are both in my sisters name but my brother may be losing his job. With his insurance he pays a whopping £550 a month just for the car and if he loses his job he is unlikely to be able to keep up with those payments; he gets £25,000 a year but he has been there for 9 years so it's unlikely he will get a job with that wage straight away. However, even if he does keep his job he is still having to pay this extra £88 for absolutely nothing.

What can we do? I don't know that if I complained to the dealership that would get my sister in a mess as it's essentially fraud, but she was pushed into it by the dealer and, I assume, my brother. Of course, that would also cause problems for the sales man who quite clearly bypassed the required checks to get a sale.

I only found this out when I was trying to help my brother with his finances as I was questioning why he was paying so much for the car, and then realised it was all in my sisters name!

Tixy

Hi

Are all 3 finance agreements in your sister's name? Or is one of them (the one you say relates to the old car in your brother's name).

I would start by getting copies of the 3 finance agreements so you can see all the details of them. That may help to establish what was borrowed, by whom and at what APR, and which are secured on the vehicle.

And you'll be able to see what sort of finance it was and if there is a voluntary termination clause.

stefan127

Yeah, all 3 are in her name.

Cheers, I'll do that. He will have to give the car back if they are all secured on it, but it doesn't look like the old £88 one will be as that was taken out for the previous car which has been part exchanged now.

sourcrates

This all sounds extremely dodgy to me, it's almost unbelievable a dealer would grant further finance on a vehicle that still had finance outstanding, without first settling the existing loan, in fact dodgy doesn't cover it, it's fraud, as you suggest.

The only way your brother can get out of this is either keep paying, not looking like a viable option, due to job loss, or blow the whole thing wide open, but that may have consequences for your sister, himself, and the dealer.

He could return the car, and challenge the legality of any outstanding shortfall, as and when contacted, it's a bit of a mess really, depends how much of a stink he wants to create.

stefan127

Cheers for the reply.

Indeed it does sound dodgy. I just don't want to drop my sister in it. I've even wondered if going bankrupt would stop all this for her and my brother can pay the fees for it, but that's her out of getting credit for 6 years.

I think I have found out the reason why the previous £88 is still in place. The payments are being taken by "Aktic Kapital"... and the initial finance was from All In One Finance, which is the now defunct Car Craft finance arm so I assume those loans were sold to a debt collector?

The dealer wasn't Car Craft so I can only guess that this local dealer had a deal with them to use their finance company.

But this adds a whole new issue to the situation and it's possible that the payments which are going to Aktic Kapital are just going to have to continue, like with a lot of people who got affected with Car Craft going bust by the sounds of it.

My brother is an absolute idiot. I have bailed him out with £8,000 of debt from pay day and guarantor loans which he couldn't afford so he pays me each month instead and now all of this! I think the family have definitely learned their lesson!

Note to anyone reading: never take finance out for someone else no matter how much you care for them!

SeduLOUs

How can an additional loan be approved without the person name on the loan agreement being present to agree to or sign it?

OP reads as though the new car was entirely the brother/dealer decision and that sister wasn't involved at that stage but perhaps I have misunderstood?

stefan127

Oh, she was involved yeah, but not actively. She was just there and she had no real idea and was there just for a name by the sounds of it. The dealer - my brother's friend - has screwed him over for commission and I bet this happens quite frequently.

I'm waiting for my brother to come home and we're going to meet at my mums and read over the T&Cs.

Even if he keeps his job this is still an issue because paying £17,000 for a £9,000 car as well as the £4,000 "top up" loan is ridiculous, especially since it wasn't sold under the most moral of conditions.

SeduLOUs

stefan127 wrote: »

Oh, she was involved yeah, but not actively. She was just there and she had no real idea and was there just for a name by the sounds of it. The dealer - my brother's friend - has screwed him over for commission and I bet this happens quite frequently.

So, if I'm understanding correctly, she signed and agreed to the new finance terms (all 3 sets) without understanding what she was signing?

If that's the case then she doesn't have much of a leg to stand on really...

stefan127

She didn't sign three, only the 1 for the current car. The second one, I have no idea (waiting to see the docs) and it appears the third was passed to Aktiv Kapital prior to the part-exchange. I don't know if that was a genuine oversight by the dealer as I assume they have changed finance companies since Car Craft's went bust but it's suspicious that the amounts are exactly the same (around £87.75 or something similar)

My concerns are that she was told to lie about her job and income. She would never normally be approved for £9,000 worth of credit for anything (would anyone out of work?), and being a provisional licence holder who has never taken a test or passed a theory... that would ring alarm bells for me.

I believe that some companies will offer finance to provisional drivers but the interest rates are ridiculous, which is probably why they are paying through the nose for it! Most companies I have seen require a full driving licence, proof of income and certain other proof (address etc). I can't find many who will give a provisional driver that much credit. The most I seen was £7,500.

It sounds like they're stuck, right?

SeduLOUs

So she's signed three then? Two for the original car, and one for the new car.

And it sounds as if when the one for the new car was signed and agreed the other one wasn't closed down fully and still has a balance - I have absolutely no idea what the legalities are around this. She should have ensured that the previous finance was closed/done and dusted before signing a new finance agreement.

You'll get nowhere by saying that the dealer told her to lie about her job/income. Regardless of who suggested the idea she is the one who did the actual fibbing and signed the appropriate forms, so it will all just fall back on her.

Valuable lesson learned that you should never take on finance/lend to friends and family/be a guarantor unless you can afford to lose the money. If she can't afford the payments for the car then her credit rating will be screwed over fairly soon. At least the car will be repo'd and your brother won't benefit from the mess, but his credit file will stay squeaky clean with regards to all this.

Tixy

If the old debt was already with activ kapital then it would be odd to be in her name. Unless she originally financed the first car for him, but then if she did then her credit file would already have showed that default.

Its more likely thats an old unsecured debt and nothing to do with the finance of the new vehicle. Hopefully that one might not be in sister's name.

Hopefully once you have all the agreements etc it should become clearer.