How to end a Hire Purchase Agreement

lcheater

Right here is the situation, I purchased a car which was up for sale at £10,000 last October. I part exchanged my old car (which was also on finance) and the negative equity was refinanced onto the £10,000. So the finance on my car ended up at around £12500 i think.

The finance is a Hire Purchase Agreement with Black Horse and is over a 5 year period, paying £245 a month. I have had the car 1 year on 3rd October. However, although i can afford the repayments along with my other expenditure, i am having problems running the car as it is a 3.0 V6 and is costing me anywhere between £45 to £50 per week on fuel and i am only covering 250 ish miles a week!

What i am getting round to is, if i could change the car for something a little less thirsty, my wallet wouldnt feel so light. I know everyone will say i should have thought about it before buying it etc etc but the question i am asking is how can i 'swap' my car in for something else? Is it even possible?

I have heard that Hire Purchase agreements mean the vehicle remains theirs until you have paid your final payment and you are renting it up until that final payment is made. This means you can hand the car back to the company if you choose you dont want it anymore. What are the ins and outs of this because it cant be as simple as just handing them the keys and saying i dont want it?

By the way, the car is valued at around £6000 (part exchange price). Any advice or comments would be appreciated. :beer:

CLAPTON

see this excellent gov site

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/DG_10013226

lcheater

CLAPTON wrote: »

see this excellent gov site

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/DG_10013226

So according to this site:
How do you end a HP agreement?

You can normally do this by handing back the goods. However, creditors may ask for up to half the total figure of the original agreement (less what you've already paid) - regardless of when you end the agreement. You'll also have to pay for the arrears and any damage (such as unusual wear and tear on furniture).
Your agreement paperwork will detail any special conditions the creditor has for ending an agreement.

This means for me, if my agreement was for £12500 and they half the debt to £6250 less around £2500 for payments made, i am looking at having to pay £3750 to settle the HP? Firstly i dont have £3750 to pay and secondly i am not really looking to clear the debt, just transfer it to another car if this is possible?

CLAPTON

One year ago you bought a car for £10,000 which is now worth 6,000 so losing 4,000 in a year. You also lost 2,500 from the previous car.

you're spending 50 per week on fuel or about £2,500 per annum.

if you get a car that cheaper to run... what sort of mileage are you expecting .. lets say a third cheaper .. so you will save about £800 per annum or £16 per week.

How much will it cost to refiance the deal?

Well you owe 12,500; lets say you will get 6k for the car which means you owe 6,500 ... how much will you spend on the new car?

Well without the figures it seems to me that any deal will cost you more money than you will save in petrol.

lcheater

I originally owed £12500 but my settlement figure is £10000 (because i have been paying it off for a year). Mileage wont change because my weekly mileage is 90% made up of commuting.

missile

Why not just ask Black Horse for a settlement figure?

If you are buying another car, they will be very happy to extend you another credit agreement. Assuming you have not defaulted on your payments?

CLAPTON

In principle you will probably be able to get a new deal that clears the existing debt 10k ? allows you to sell the car 6k (probably only part exchange at the dealer) ? and buys a new car x k ?.

How much will this be and what will the monthly repayments be?

However i'm suggesting to you that this will cost you a lot of money that probably wont be recovered by the lower petrol bills... So what sort of replacement car are you thinking of .. how much will it cost and what will the realistic fuel costs be.

At the moment you are probably getting about 21-25 miles per gallon so how much better will it be with a different car?

Work it out this way
current situation
HP costs 2500 per year for a further 4 years (i'm guessing here)
Petrol 2500 per annum (or whatever your best guess is)

total 5000 per annum for 4 years

then do the same assuming you get new HP over 4 years and compare the totals.

lcheater

missile wrote: »

Why not just ask Black Horse for a settlement figure?

If you are buying another car, they will be very happy to extend you another credit agreement. Assuming you have not defaulted on your payments?

I have asked for a settlement figure from Black Horse, which is just over £10000 (dont know the exact figure off hand as i dont have the letter in front of me).

I am looking to buy another car and i have never missed any payments. However, my sticking point is if the settlement figure is £10000 and they give me £6000 in part ex for my car, thats 4k of negative equity to finance before financing the new car. Car dealers wont be wanting to part ex a car for 6k, for me to buy a car for 6k (to them there wont be a distint advantage involved). Also, will Black Horse (or anyone) be prepared to finance 10k against a 6k car?

missile

The dealer will be happy to "deal". Usually the dealer gets commission on selling you more finance. The car you buy will be overpriced and he will sell your car for more than he gives you as trade in.

It is called business

It would appear Black Horse already financed you £12500 on a car valued at £10? I think you have a loan rather than simple HP agreement. Thus you cannot simply hand the car back and walk away.

lcheater

CLAPTON wrote: »

In principle you will probably be able to get a new deal that clears the existing debt 10k ? allows you to sell the car 6k (probably only part exchange at the dealer) ? and buys a new car x k ?.

How much will this be and what will the monthly repayments be?

However i'm suggesting to you that this will cost you a lot of money that probably wont be recovered by the lower petrol bills... So what sort of replacement car are you thinking of .. how much will it cost and what will the realistic fuel costs be.

At the moment you are probably getting about 21-25 miles per gallon so how much better will it be with a different car?

Work it out this way
current situation
HP costs 2500 per year for a further 4 years (i'm guessing here)
Petrol 2500 per annum (or whatever your best guess is)

total 5000 per annum for 4 years

then do the same assuming you get new HP over 4 years and compare the totals.

Replacement car is going to be a diesel and from my previous diesel cars will do around 400 miles per tank of £45. I am not expecting to decrease my monthly payments with Black Horse, but the new car will decrease my insurance premiums as well as fuel costs.

My calculations using your little template shows a cost of £5256 pa for 4 years. I am not bothered about how many years it is over so if i work the calculations for the new car out it will be £4216, allowing for £50 every other week for fuel and the same payments on finance but over 5 years. It is worth noting here that i am only interested in monthly expenditure, i have no interest for how many years the finance is for.

lcheater

missile wrote: »

The dealer will be happy to "deal". Usually the dealer gets commission on selling you more finance. The car you buy will be overpriced and he will sell your car for more than he gives you as trade in.

It is called business

It would appear Black Horse already financed you £12500 on a car valued at £10? I think you have a loan rather than simple HP agreement. Thus you cannot simply hand the car back and walk away.

My paperwork says it is a Hire Purchase Agreement though!?