Voluntary Termination of HP Car Loan

Lugzyboy82

Hi guys, I'm after a bit of advice.

I have reached the halfway point of my vehicle finance loan and have decided to hand the car back as the vehicle has drained all of our savings due to repair costs since receiving the vehicle. I have spoken to the company and they have said that this is our legal right and we can do this. I have done the reasearch on this and apparently its a case of agreeing a pick up/drop off place for the vehicle, handing over the keys and paperwork and walking away with no further commitment which is fine by us.

After again speaking to the finance company, they are now saying that the car will be sent to auction and if the car sells for less than the amont that remains on the finance agreement then we have to pay the deficit. I cant see this as being correct as this defeats the object of the clause in the agreement.

Can somebody please shed some light on what the process is?

Thanks in advance.

Nearlyold

Check you HP agreement paperwork, there should be a figure for the total amount payable including all interest fees etc. There should also be confirmation of the 50% of the total amount figure, this is the amount you have to have paid before you can voluntarily terminate without any further commitment (subject to a fair wear and tear clause). Once you have reached the 50% figure the lender has to accept your voluntary termination and if the car is worth less at auction than the amount you still owe, then that is their problem not yours. Remember the 50% paid figure includes everything you have paid including deposits etc

Lugzyboy82

We have checked the amount that needs to be paid before we can hand the vehicle back and we have exceeded this so I thought we would just have to hand the car back and thats that but they are still standing their ground that if there is a defecit then this needs to be paid. I cant see any such clause in the contract apart from our right to terminate at the half way mark.

Nearlyold

Raise a formal complaint with the lender pointing out that voluntary termination is a statutory right and they have no entitlement to compensation for any loss they might make. (unless the loss is because you have handed the car back in less than a satisfactory condition after accounting for normal wear and tear)

Lugzyboy82

The car is in great condition. Apart from the usual wear and tear on a 9 year old car then we have no worries there. I think it will be snapped up at auction. I will just have to fight with them on this occassion because I have been told by a few main dealers that when this particular clause is envoked, its a case of hand the car back and thats that.

Nearlyold

When you hand the vehicle back, take plenty of photos to prove the condition in case the lender comes back with spurious claims for damage

iolanthe07

Nearlyold wrote: »

Raise a formal complaint with the lender pointing out that voluntary termination is a statuary right and they have no entitlement to compensation for any loss they might make. (unless the loss is because you have handed the car back in less than a satisfactory condition after accounting for normal wear and tear)

It might be more convincing if you spelt 'statutory' correctly.

Nearlyold

iolanthe07 wrote: »

It might be more convincing if you spelt 'statutory' correctly.

Good point - in my defence I was posting in a rush between cutting hedges and didn't notice the spell checker miss-correction, perhaps if the OP stood very still for a long time when making his complaint the miss-spelling might have some validity.;)

National_Debtline

Hi Lugzyboy82,


Nearlyold has made some really good points but I should clarify a few small misunderstandings. With a Hire Purchase agreement you have the right to voluntarily terminate at any point in the agreement assuming that no default notice has expired prior to now. When you voluntarily terminate an agreement you will be liable for 50% of the total amount payable (minus what you have paid to date), so if you have already paid more than 50% you have helped to simplify the situation. All you need to do to actually terminate the agreement is send this letter to the lender, make sure you send it recorded delivery and keep a copy and as soon as the lender has received this, the agreement is over.

The lender can then ask you to return the vehicle to them, if that is not an unreasonable distance, and you should arrange a suitable time together. When you return the car make sure you take plenty of photos (as already said) because the only other thing you can be held liable for is excessive wear and tear to the car. In this situation, auctions are not involved.

There is obviously some confusion here and I think that confusion has come from the fact that if the lender terminates an agreement then you are liable for 100% of the total amount payable, minus the money paid to date and minus the resale at auction (if applicable). This is only applicable if you have had issues with payments in the past and they have issued a default notice. If this has never happened then the lender is mistaken in their understanding and if they try and chase you for any other money you should be able to deal with it through a complaint and the Financial Ombudsman. Good luck,


Laura
@natdebtline

simpson_77

i did a voluntary termination at the end of 2010 with Park motor finance. Pretty easy, they came and collected the car and it went through the auction. i owed £4,700 and the car sold for £1,600. there wasn't any comeback.

It was a BCA (British Car Auctions) transporter which collected the car, I wasn't even told what it sold for (I called the auction house to find out).

I would give it a good clean, and take lots of photos, to collaborate the condition of the vehicle when it was returned.

Good luck