PCP Voluntary Termination

Hueykablooie

Hi
I am new to these forums but I am hoping for a little help with a VT that I have completed well over 50% of the total agreement (only one payment left plus the balloon payment if you opt to keep the car). I opted for VT as the as I was going to be left with negative equity as the car had been valued at less than the balloon payment. When I spoke with the VT team they said everything straight forward & no further payments necessary, cancel the direct debit as soon as handing car back etc.
I now have a notice of sums of arrears informing me I owe over a grand as the sale at auction was not enough to cover the final balloon payment.
I understood once the agreement has been terminated, your obligations under the agreement in relation to the installments & balloon payment fall away - is this correct?

molerat

You seem to have confused VT with ET. Did you sign any paperwork stating you were liable for the shortfall ? Why did you wish to VT so late in the agreement, paying the final payment and handing back at the end of the contract would mean nothing to pay except for any possible damages. The balloon payment and value of the car are irrelevant, that is a risk the lender takes on. You need to start by querying why they want the money and then raise a complaint if necessary. Are you sure this is not for damages ?

Hueykablooie

Hi molerat,

Definite VT. I opted for VT as I was going to be in negative equity when I took the car back to the dealer to swap for another car & would have had to make up the shortfall. The car dealer said a way to get around this is to arrange VT which is what I did.
It's the difference between the balloon payment and the amount they have sold it for at auction (plus a final installment) that adds up to the £1000 they are expecting me to pay, not damages or excess mileage.

molerat

Did you sign any of their "termination" paperwork ? You most likely need to raise a complaint and take it to the ombudsman if they don't drop the charges.

Hueykablooie

No termination paperwork signed - it was never sent. I spoke with the VT team who verbalised everything & then told me to email the collections dept to arrange the collection of the car. The only thing I signed was the paperwork at the Auction house to say the car had been checked over & was in satisfactory condition.

ChuckMountain

Are there any terms on the copy of the paperwork you took from the auction house?

You need to check you original contract which will give the specific amount needed for 50% VT if you have paid that amount or more and requested a VT then you owe no more assuming that the car was in reasonable condition for the age.

As molerat says it does not matter what the car is worth at the end of the PCP contract as it belongs to the finance company not the dealer (new or old). If you want to return it with no costs then you either VT at 50% or run to the end of the term and give it back to the finance company. The latter may incur excess mileage possibly and both may have a charge to repair any damage. Companies also try claiming back excess mileage on VT too but that has been challenged in court and won by the consumer. Look at legalbeagles for more info on that.

The only time you could be in negative equity is if you are part exchanging it and it's worth less than then outstanding finance. You wouldn't want to do that and it makes the sales person job harder to try and get you that new "Special" deal.

It sounds like somebody has got the process wrong somewhere and not marked it as VT.

As molerat need to raise a complaint with the company and raise with Ombudsman.

Have you rung the finance company to ask ? That might give you more details on which to make your complaint.

Hueykablooie

It was indeed negative equity in terms of part exchanging and the car was worth less than the outstanding finance.
I spoke with the VT team & they confirmed I was within the correct timeline having reached the 50% of the total price payable.
I have raised a complaint with the company and the Financial Ombudsman Service and waiting to hear back.

verityboo

Did you ever fall behind with payments for the car?

ChuckMountain

Hueykablooie wrote: »

It was indeed negative equity in terms of part exchanging and the car was worth less than the outstanding finance.
I spoke with the VT team & they confirmed I was within the correct timeline having reached the 50% of the total price payable.
I have raised a complaint with the company and the Financial Ombudsman Service and waiting to hear back.

Did you speak to them today and did they give you an indication of what the issue was?

You need to complain to the company before you complain to the FOS. They need the right to resolve the problem first and if they don't resolve it to your satisfaction to or don't bother responding then you go to the FOS.

National_Debtline

Hi Huey


When you terminate a PCP agreement you will be held liable for 50% of the original agreement, minus the payments you have already made. You can also be held liable for any damage to the vehicle (beyond reasonable wear and tear) and there may be terms within your agreement that mean extra charges can be added, for example if you went over the mileage limit.


When you terminate yourself it is not relevant how much the car then sells for. That only comes into the equation where the creditor terminated the agreement, as in that situation they hold you liable for 100% of the original agreement minus the amount the car sells for at auction. They can again also hold you liable for damage & breaking any terms in the agreement.


The problem with terminating the agreement verbally is you have no proof of whether you or the creditor ended the agreement, however you can still try making a complaint on the basis of the conversation you had about handing the car back. If you are not happy with their response, escalate your complaint to the FOS (www.fos.org.uk) and they will investigate.


Good luck with it all


Susie
@natdebtline

Hueykablooie

Thanks all for wise words, the lender has at last come back with 'account all clear - ignore the letter sent as it is automated' much to my relief !!
Hopefully this thread / discussion will be of use to the next person hit by a Notice of Sums of Arrears letter through the post when you think you have done everything correctly after having reached the 50% of the total price payable.