PCP Citroen terminating loan agreement

ameygee

Hello,
Just looking for some advice please.
I took out a PCP on a Citroen c1 in November 2013 (had it for 2 years, 2 months)
I'm looking to hand the car back in early and get a NHS salary sacrifice car as it's financially better for me.

I went into the citroen dealership who said my car was in negative equity of approx £200 so if I was to cancel the agreement early I would have to pay the outstanding balance which is approx £5000 and keep the car, so he advised keeping the car till the end of the three years then handing it back.

I've came home looked at the paperwork and in with my financial yearly statement it says: 'You also have the right to end this agreement early in accordance with section 99 of the CCA 1974. You will not have to pay all the sums due under the agreement, but you will not be entitled to retain the goods if you do this'.

I know from looking on the internet if you have paid more than 50% of the agreed finance you can terminate early? I vaguely remember when the guy sold me the car he said after 18 months I have flexibility in handing back, part exchanging etc.

Can anyone help with this? I'm going to call the finance department tomorrow when they re-open.
Does anyone know if this would affect my credit rating also? Surely not as it's 'my right'?

Thanks in advance!

antrobus

ameygee wrote: »

.. I know from looking on the internet if you have paid more than 50% of the agreed finance you can terminate early?....

You can terminate a HP/PCP agreement early at any time; it's just that the CCA limits your liability to 50% of the total price should you do so. So if you've already paid 50%, there is no further liability.

ameygee wrote: »

.. I vaguely remember when the guy sold me the car he said after 18 months I have flexibility in handing back, part exchanging etc....

Never mind what the salesman said; go look at your PCP agreement. What's the total price, how much have you paid so far.


P.S. Finance companies don't like voluntary terminations, but they have to lump it, and it does not impact your credit rating.

Nearlyold

Yes you have the right to a Voluntary Termination once you have paid 50% of the TOTAL amount payable under the agreement
The total amount payable includes any finance fees, the balloon due at the end of the PCP and all the interest that would have been due, the figure should be on your agreement somewhere (any deposit or part exchange counts towards the 50% paid).
It does not affect your credit rating though it can mean you might not get offered Hire Purchase on a future finance deal from the same lender and will only be offered a personal loan (which does not have VT rights)

ameygee

Hey, thanks so much for your replies.
I spoke to the finance people and they reiterated what you said, I owe approx £300 on the car to take it up to the 50%, which is great as my new car takes approx 12 weeks to order so I'll cover this in my normal payments.

But what has completely baffled me is this, I took out financial shortfall insurance, I was happy to do so, this cost £299, and according to Citroen finance, they paid this upfront and loaned it to me. So every month i've been paying approx. £4 off this loan. So I owe approx. £170 off that also, which will need paying if I voluntary terminate, but furthermore even if I waited until the three years expired I would still owe approx £120 on this which would need paying at the end upfront!

This was not explained to me when I took the car out, I didn't realise I was only paying £4 off the loan for the financial shortfall insurance, I thought it was put into the total figure for the car and I was just paying it off. I know I probably sound very naive, this was my first PCP car, and no doubt my last.

Any thoughts?

Shack_attack

ameygee wrote: »

Hey, thanks so much for your replies.
I spoke to the finance people and they reiterated what you said, I owe approx £300 on the car to take it up to the 50%, which is great as my new car takes approx 12 weeks to order so I'll cover this in my normal payments.

But what has completely baffled me is this, I took out financial shortfall insurance, I was happy to do so, this cost £299, and according to Citroen finance, they paid this upfront and loaned it to me. So every month i've been paying approx. £4 off this loan. So I owe approx. £170 off that also, which will need paying if I voluntary terminate, but furthermore even if I waited until the three years expired I would still owe approx £120 on this which would need paying at the end upfront!

This was not explained to me when I took the car out, I didn't realise I was only paying £4 off the loan for the financial shortfall insurance, I thought it was put into the total figure for the car and I was just paying it off. I know I probably sound very naive, this was my first PCP car, and no doubt my last.

Any thoughts?

This could be like the "ppi" scandal. If you can prove they didn't mention the extra payment then you should be entitled to the money back which you've paid or compensation to that effect.

Not sure how it would work in terms of the VT though and whether it would be included in the terms or as an additional payment??

ameygee

I know I signed up to this and was happy to, but the payments were never explained to me, I don't even have a contract in with my paperwork, so the finance company are sending me a copy.

They have said the voluntary termination is for the car only, but the extra money for the insurance needs paying as they 'loaned' it to me so I could pay the shortfall insurance straight away, and the full loan needs paying, which I understand. I think i'm going to have to write a very strong worded complaint to the dealership.

nomoneytoday

Why would you need, "shortfall insurance", when the PCP has a guaranteed balloon payment at the end?

I'd be reading the paperwork to check if it was correctly sold

Nearlyold

nomoneytoday wrote: »

Why would you need, "shortfall insurance", when the PCP has a guaranteed balloon payment at the end?

I'd be reading the paperwork to check if it was correctly sold

Shortfall insurance is designed to protect the customer in the event of a Total Loss of the vehicle by typically paying the difference between the current market value of the vehicle at the time of the loss and the greater of the amount required to settle the finance or the original invoice price of the vehicle.

The guaranteed balloon payment at the end has got nothing to do with it

nomoneytoday

Nearlyold wrote: »

Shortfall insurance is designed to protect the customer in the event of a Total Loss of the vehicle by typically paying the difference between the current market value of the vehicle at the time of the loss and the greater of the amount required to settle the finance or the original invoice price of the vehicle.

The guaranteed balloon payment at the end has got nothing to do with it

So it's another name for Gap insurance