Getting out of HP early

Daveahare99

Hi There

I am currently 6 months payments short of the 50% voluntary termination threshold on my BMW hire purcharse agreement. I have paid off approx 12k and need to get to 16k. Does anybody know any tactics in order to get out of this early? (apart from paying the balance).

It just seems a little unfair as I have been a customer for years and this car has devalued so much in the last 2 years that theres just no point in looking to clear the finance and own it.

Thanks

molerat

What is the value of the car ? Have you had a settlement figure ?

Daveahare99

Thanks for replying.

The total amount payable is £32,467.82. Comprising interest of £7,488.82.

It then says under 'termination your rights' it says I am entitled to return the goods to half the total amount payable. Listed as £16,233.91.

Clive_Woody

Daveahare99 wrote: »

It just seems a little unfair as I have been a customer for years and this car has devalued so much in the last 2 years that theres just no point in looking to clear the finance and own it.

Thanks

Not wishing to sound too blunt, but this is the agreement you signed up to, so I assume at the time it seemed fair.

Having already taken the hit of devaluation from new I would have thought clearing the finance and keeping the car (assuming it's working fine and you still need a car) makes most sense. Getting rid of it now would leave you with no car and also you covered the depreciation for the next owner. Getting another new car and repeating the cycle makes no sense (to me), even getting a cheap second hand car means you do not know the history of the car so it is a gamble.

Depending on the APR for your HP, could you get a loan at a lower APR, clear the finance with BMW and then look to overpay your new loan ASAP to reduce interest and hang on to the car?

HogMan

Many years ago when I last purchased a car on HP I was in a similar situation, the car was worth less than the amount remaining to be repaid. I contacted an Independent Financial Advisor who told me that whilst I could hand the car back after 50% had been repaid the damage it would cause a good deal of damage to my credit history.


Subsequently I have taken out personal loans where necessary to finance a car purchase and taken them out over the shortest term I can afford (never more than 3 years). That way I own the car from day 1 and can sell/trade as necessary.

Ashingtonian

HogMan wrote: »

Many years ago when I last purchased a car on HP I was in a similar situation, the car was worth less than the amount remaining to be repaid. I contacted an Independent Financial Advisor who told me that whilst I could hand the car back after 50% had been repaid the damage it would cause a good deal of damage to my credit history.


Subsequently I have taken out personal loans where necessary to finance a car purchase and taken them out over the shortest term I can afford (never more than 3 years). That way I own the car from day 1 and can sell/trade as necessary.

That is incorrect.

PeacefulWaters

HogMan wrote: »

Many years ago when I last purchased a car on HP I was in a similar situation, the car was worth less than the amount remaining to be repaid. I contacted an Independent Financial Advisor who told me that whilst I could hand the car back after 50% had been repaid the damage it would cause a good deal of damage to my credit history.


Subsequently I have taken out personal loans where necessary to finance a car purchase and taken them out over the shortest term I can afford (never more than 3 years). That way I own the car from day 1 and can sell/trade as necessary.

It's not exactly an area of expertise for the typical IFA.

Nearlyold

A VT won't damage your credit history, all that may happen is you won't be offered HP for your next vehicle purchase, instead may you only be offered a fixed sum/term agreement (basically a personal loan) which of course doesn't have VT rights.

MataNui

It wont damage your credit history but you will be unlikely to get HP or a PCP deal for a while. Which is probably a pretty good thing for you.

Nearlyold

MataNui wrote: »

It wont damage your credit history but you will be unlikely to get HP or a PCP deal for a while. Which is probably a pretty good thing for you.

Agreed however on a technical note it is possible the OP might be offered a PCP not based on HP or conditional sale agreements whereby the lender contracts to buy the vehicle back at the end of the monthly payment term for an amount equal to the outstanding balloon (subject to the usual mileage and condition clauses)

System

Daveahare99 wrote: »

It just seems a little unfair as I have been a customer for years and this car has devalued so much in the last 2 years that theres just no point in looking to clear the finance and own it.

Thanks

But that is what happens to new/nearly new cars, the biggest chunk of depreciation is in the first 2-3 years. I tend to leave it to the HP/PCP suckers to pay for that and buy my cars at the newest at 2 years old. My current car I bought at 2 years old for just 40% of its new price, letting some other mug pay over £16,000 to own it for its first 2 years.