Voluntarily termination of PCP

Nhg

Help urgently needed.

I took out a PCP agreement in June 2014, the total amount repayable was a little over £28,600. In the your rights to terminate box it states that £14,338 is repayable before it can be terminated.

My repayments are only £295.95 a month for 36 months, and I put down a £2000 deposit with a dealer contribution of £1000.

My total repayments if I made all 36 payments make £10,650 and with the deposit I would only repay around £13,500.

That means that I don't have any rights to cancel the agreement as I never repay 50% of the amount.

Please can someone help me with what my position is? Does this mean that the contract is unenforceable??

Help please!!!!

foxy-stoat

Nhg wrote: »

Help urgently needed.

I took out a PCP agreement in June 2014, the total amount repayable was a little over £28,600. In the your rights to terminate box it states that £14,338 is repayable before it can be terminated.

My repayments are only £295.95 a month for 36 months, and I put down a £2000 deposit with a dealer contribution of £1000.

My total repayments if I made all 36 payments make £10,650 and with the deposit I would only repay around £13,500.

That means that I don't have any rights to cancel the agreement as I never repay 50% of the amount.

Please can someone help me with what my position is? Does this mean that the contract is unenforceable??

Help please!!!!

What is the balloon payment after the 36 months?

Nhg

Around £15,000

Nearlyold

Are you looking to VT the vehicle? If so the good news is you can do so at any time by simply making up the difference between what you have paid (including deposits) and the 50% payable of £14,338 - though you would be taking quite a bath on it.

If you are hoping that the agreement is somehow unenforceable so that you can either keep the car and not pay for it or just hand it back without paying 50% I'm afraid it's not good news. There is on all HP type agreements a statutory right to VT once 50% of the total payable has been paid but there is nothing in the legislation that says monthly payments have to reach the 50% stage before a particular point in time.

verityboo

That seems like a very high guaranteed future value / balloon payment figure compared to the price paid. Have they allowed for only a very low annual mileage to allow them to inflate the balloon figure and reduce monthly payments?

SeanG79

Agreement is fully enforceable, you need to pay 50% of the overall agreement and you can hand back the vehicle or you can run the agreement to term and then hand back the vehicle. Or I'm pretty sure the lender will agree to take the vehicle back if you paid the remainder of your contractual payments now (probably not a good idea).

Had you put down more deposit and taken a smaller GFV then you would have reached the 50% point during the agreement. As mentioned above, there is no requirement that the agreement must reach the 50% marker at any specified point in time.

MuddyFunster

Yep, the balance of ownership doesn't shift on this agreement until after the GPV payment is made or otherwise - there will be no option to VT this agreement.

Based on the information in hand it's right and proper.

If your circumstances have changed you can speak to the finance company about making an arrangement, or you there may be an option to sell the vehicle to settle the PCP agreement - but given it's only 18 months old and the small deposit it's unlikely it's worth more than the settlement figure.

foxy-stoat

What the OP is saying, there is no way to VT the agreement before the 36 months is up without paying more than they would of done in that agreement.

As for the contract being unenforceable, you will only find out using an expensive solicitor and a more expensive Judge, unless the OFT can be of help.

Assuming you read and understood the agreement at the time.

Goodl luck

Nhg

All I want to do is get rid of the car now, are they really allowed to not let me VT until 50% of the value has been paid back? My mileage per year is 10,000 miles so it isn't that low. It seems so bad that consumers have no rights whatsoever, I now wish I had never taken the agreement out

SeanG79

foxy-stoat wrote: »

What the OP is saying, there is no way to VT the agreement before the 36 months is up without paying more than they would of done in that agreement.

As for the contract being unenforceable, you will only find out using an expensive solicitor and a more expensive Judge, unless the OFT can be of help.

Assuming you read and understood the agreement at the time.

Goodl luck

The right to VT was incorporated into the Consumer Credit Act to ensure that funders correctly valued vehicles and did not lend in excess of what the vehicle (goods) were valued at by taking a sensible deposit. That way a customer wouldn't keep paying for something that was valued at significantly less than the vehicle (goods) were worth. It forces the lender to take a joint responsibility.

VT was never meant to protect the consumer against a change in circumstances or offer a get out clause.

In a correctly structured finance agreement, it will never be in the consumers interest to VT the agreement as there should be equity in the vehicle, meaning it would be in the consumers interests to sell the vehicle and settle the finance early.

In this instance, the OP is in a position when they hand the car back, irrespective of its value, the lender has taken liability for what seems a large balloon. There is nothing wrong with the VT being only available after a portion of the GFV has been paid. In most PCP agreements, the right to VT the car is far nearer to the time the GFV is due than would be the case of a full term HP ageement.

SeanG79

Nhg wrote: »

All I want to do is get rid of the car now, are they really allowed to not let me VT until 50% of the value has been paid back? My mileage per year is 10,000 miles so it isn't that low. It seems so bad that consumers have no rights whatsoever, I now wish I had never taken the agreement out

You have all the rights afforded to you by the consumer credit act and consumer credit directive.

You have the right to VT the agreement once you have made 50% of the overall value of the vehicle + contracted interest and fees.

You do not have the right to simply want out of the agreement that you should have read and understood before you signed.

Have you obtained a settlement figure from the lender and compared that to what you can sell the vehicle for? The GFV is based on a CAPS/Glasses future value guide, so from the GFV you have been given, the vehicle should hold its value fairly well.