Voluntary default - car finance

Jonathan_Wicks

Hi all,

Back in August 2016 I had to unfortunately voluntarily default on a hire purchase I took out due to leaving my previous "well paid" job and helping to develop a new start-up business.

The value of the car was £38,500 and the interest rate was 6% per annum over a five year tenor. I was paying roughly £850 per month. I paid this for just over 10 months until I decided that I was not going to be able to afford this luxury with my new monthly salary - So I voluntarily defaulted.

I worked out that I had paid roughly £9000 of the car off at the point of voluntarily defaulting. The car was then picked up several weeks later and sold at auction (for what I have been told was close to the purchase price of the car when I bought it), The issue I have here is, I was under the initial impression that I would be paying off the offset between the amount paid and the total amount liable as of trade date (when I first took the loan out).

I would have taken total paid as:

Total paid via monthly installments - £9000
Total received from car at auction - £36,000

Total amount paid - £45,000

The above seems the logical and fair way of thinking to me.

I have recently looked at my Experian credit score as I received a notification that my credit score had dropped a total of 391 points this month with the main reason behind it... BARCLAYS CAR FINANCE - with an outstanding balance of £18,257!

I have had one conversation with their debt recovery team and since then no more dialogue has been opened. I was awaiting information on how to pay the outstanding but have never received it.

Barclays issued a default against my name on the 8th of January 2017.

The questions I would like to ask you all is:

1. Is there anything I can do to rectify the default? (I want to pay the outstanding off, but as previously mentioned - I am not currently in the position to do so in full)
2. Are Barclays allowed to default me without giving me formal notice in a form of a letter?
3. Why would Barclays default me 7 months after?
4. The overall monies Barclays have received is over £60,000 (if I pay them 18,257) that, in theory is 155% of the original car value?
5. Are there any options I can take to reduce the amount liable?

I look forward to receiving your responses!

Best regards

Jon

foxy-stoat

Yeah, you have this wrong.

If the screen price for this car was £38,500 then the auction cost would not drop by only £2500.

You have not allowed for any interest in your figures in your rough calculations.

You have not allowed for default costs or any costs associated with collecting the vehicle, termination of the contract, auction costs.

I would try and speak to Barclays for a breakdown of their figures to put your mind at rest when dealing with the £18K that is outstanding. If you have grounds to appeal then do so, they have to abide by regualtions and contract, even if you didnt. They may not be interested as this debt has been transfered to the collections agencey so you may have to negoicate with them.

Good luck and update the thread with how you get on.

Gaz83

There's something wrong with your figures. If you were paying £850 a month then your payments would have been due to stop after 4 years, 3 months. So either your monthly payment is wrong or your interest rate is wrong.

Jonathan_Wicks

I can confirm the car was auctioned at £36,000.

My interest rate was a ball park figure, I'll rustle out the contract later on this evening.

I just got off of the phone to Barclays and they stated that the cost for voluntarily defaulting is half of the total amount liable - something that has never been explained to me.

The issue of default under my name is due to not paying the £18k back - this was a debt passed to a company named CRS - of whom I have never had a dialogue with.

Now this default is on my credit report for 6 years.

Thanks for your reply anyway, I'll update when I get to the bottom of it all... after speaking to CRS.

dieselv2

Where you not given an information pack when you opted for voluntary redundancy or was it mentioned on your original agreement. You have have a case if the answer is no to both.

Nearlyold

If you were due to pay £850 pm for 5 years your total payments would have amounted to £51000 plus an arrangement fee and the option to purchase fee, probably adding another £300

With a Voluntary Termination (Not defaulting) you can hand the car back provided you pay 50% of the total amount payable (including interest & fees) ie £25,650. All this will be detailed in your finance docs.

Using your approx. figures after 10 months you would have paid £8500 in monthly payments leaving £25,650 minus £8500 = £17150 to pay to voluntarily terminate, which is pretty close to the £18,000 you have been asked to pay (it would be bang on coincidentally if you had made just 9 payments on the figures you gave.

With a VT the amount the finance company may or may not get for the car at auction is irrelevant and frankly I'd be amazed if the car fetched £36,000 at auction anyway.

If the car really was still worth £36,000 when you handed it back you would have been much better to have sold it and paid off the finance by way of early settlement but that's water under the bridge.