Car loan

tony9876

Hello
I am going through a divorce and need some financial advice quickly please.

I have a car loan with a car finance bank at a fairly good rate so no high interest to worrry about. It has just less than 2 years to run on a 5 year loan.

My wife is getting pretty nasty financially since all of our debts are in my name.

If I were to ask the bank to repossess the car, which it seems I can do after reading the agreement, what would be the implications to my credit rating if I did this and paid off any outstanding balance after they had sold it?

The problem is that the car is in her name but the loan is in my sole name so I can't even sell it myself but the bank is the owner until the last payment is made.

I am not in a position to pay off the loan and my wife won't pay it off because she doesn't want to.

Any advice would be appreciated.

Tony.

[Deleted User]

Do you mean VT?

tony9876

Hello

Yes I meant voluntarily asking the bank to take back the car and making good any difference between the value of the car and the outstanding balance.

[Deleted User]

If it's a PCP deal, you can VT once half of the total repayment has been made. Who has the cat though?

Repossession would involve defaulting on the agreement until the balliffs.come round to collect the car. That would be very bad news both financially and for your credit file.

foxy-stoat

tony9876 wrote: »

The problem is that the car is in her name but the loan is in my sole name so I can't even sell it myself but the bank is the owner until the last payment is made.

This is not a problem then, since the V5 is not proof of ownership.

What you are saying is the soon to be Ex-Wife wants to keep the car but doesnt want to pay for it....this should come out of the wash in any finanical settlements once the divorce is settled.

If she wants to keep the car and not make any payments towards it then get a settlement figure and pay the outstanding balance once any property is sold, if you are not able to continue paying for it and she doesnt want to pay for it then sell it and clear the finance if its worth more and she can buy something cheaper.

The only way the bank will repossess is if you stop paying for it, you credit file will be trashed for 6 + years.

tony9876

Hello again
I have checked the paperwork and it says if half of the payments have been made, then I can ask them to take it back.
This isn't a PCP but a loan from a bank for car finance which was arranged by the dealer.
The paperwork also says they are the owners until the final payment is made which means selling is not an option.
The main point I need clarification on is the hit on my credit rating. If I ask them to take back the car under my right to terminate the deal, as long as I make good any difference between the value and outstanding balance, will I get a big hit on my credit rating?

Shakin_Steve

From what I can gather, exercising your right to return the car is a perfectly legal way to end the agreement. They can add on charges for excess mileage and damage to the car, but your agreement is terminated, with no comeback.

From one article:

"The ‘Half Rule’ is a piece of consumer legislation that entitles you to return your car to the bank who lent you the money if and when you have paid half the ‘hire purchase’ price.

Once returned under this rule your agreement will be ended and you will not be liable for any further payments or suffer any black marks on your credit rating."

Shakin_Steve

Also remember, that unless you have 'fixed' interest on your loan, you may not, after half of the term, payed back half of the capital. As with a mortgage, etc., a lot of the initial payments go towards the interest. If a fixed interest agreement, the interest is divided equally over the term, so you will have paid half of the capital.

Shakin_Steve

https://www.carfinance247.co.uk/faqquestions/106/voluntary-termination-of-car-finance

rockey100

Yes, the v5 is only the registered keeper, not the car owner.

molerat

Do you have possession of the car, the keys and the V5 ? In many cases you have to return the car to a local pick up point or the collection agent will collect from you. They will not take the car away in a confrontational situation, you have to hand the car over.

If you VT there is no hit to your file, apart from maybe a VT marker which may put off some car finance providers in the future if you do it too many times but reports here suggest that is unlikely. If you Early Terminate you are responsible for the difference in what the car gets at auction and the balance due at termination date, you need to ensure you take the correct route. The only way to get the car repossessed is to default which will trash your credit.