Voluntary surrender vs Voluntary termination

Tinks85

So in March I bought a car on HP. In November I got. New job that came with a company car. It doesn’t make any sense for me to keep 2 cars. This leaves me with 2 options.

Voluntary surrender where they take the vehicle, auction it and I do a payment plan for the rest of the balance. This won’t affect my credit rating (apparently)

Voluntary termination. Where they take the car, appraise it (I’m liable for any damages bar fair wear and tear) they auction it but I have to pay back over £6500 and this will show on my credit file as an early termination.

Never been in this situation before so I would appreciate any advice on the best option to take.

Many thanks

facade

What is the likely shortfall between an auction price and the settlement figure? Try valuing your car at WBAC, they will auction it, so an auction should raise more than this figure.

If you are positive that this shortfall will be less than £6500 then the first option would seem best.


The third option is to raise the cash for a settlement, then you can sell the car for what you can get, but there will still be a shortfall, unless you paid a huge deposit, it will be in negative equity after a year.

molerat

Voluntary Termination is only available once you have paid 50% of the total finance, you can make up any shortfall from the 50% mark with a payment before termination. This may appear on your credit file as VT but is unlikely to have any effect unless you have a few and want to get another car.

Voluntary Surrender is where they take the car and sell it at auction, where it is unlikely to reach its true value, then set that sum raised against what you owe plus any costs they have incurred. The debt then is immediately payable but they may allow a payment plan which may incur interest so you will be paying for a car you don't have.

Early Settlement where you pay the remaining settlement figure then sell the car.

Voluntary surrender is likely the worst option to take.


So the figures you need are :
The value of the car - from WBAC or suchlike or a realistic figure you will get private.
The difference between what you have paid and the half way figure.
The settlement figure.

From there you should be able to figure out which one is going to hit your pocket less. Be under no illusion, this is going to hurt you whichever way you go, you just need to minimise that cost.

Tinks85

So WBAC and similar are valuing at £9200 but it’s an ex rental car (unknown to me until I purchased vehicle so that means the valuation drops by £2000 before we even start.
Account total is over £16000
Early settlement is £12089 but no way of getting that together.
They’ve offered voluntary termination as an option but I haven’t paid 50%

motorguy

molerat wrote: »

Voluntary Termination is only available once you have paid 50% of the total finance, you can make up any shortfall from the 50% mark with a payment before termination. This may appear on your credit file as VT but is unlikely to have any effect unless you have a few and want to get another car.

Voluntary Surrender is where they take the car and sell it at auction, where it is unlikely to reach its true value, then set that sum raised against what you owe plus any costs they have incurred. The debt then is immediately payable but they may allow a payment plan which may incur interest so you will be paying for a car you don't have.

Early Settlement where you pay the remaining settlement figure then sell the car.

Voluntary surrender is likely the worst option to take.


So the figures you need are :
The value of the car - from WBAC or suchlike or a realistic figure you will get private.
The difference between what you have paid and the half way figure.
The settlement figure.

From there you should be able to figure out which one is going to hit your pocket less. Be under no illusion, this is going to hurt you whichever way you go, you just need to minimise that cost.

The second part of your sentence kind of elaborates a bit, but the first bit is wrong. You can VT at ANY point from day one. The finance company can only pursue you for up to 50% of the total transaction cost, which includes any deposit made, contributions, payments made etc.

But yes, i'd be doing what you're proposing - get a settlement figure, get a valuation and work from there. VS would be my least favourite option too as you've no control over the end figures. Its a leap of faith. Although you could get an auction guide figure for the car and work back from there as an approximation.

motorguy

Tinks85 wrote: »

So WBAC and similar are valuing at £9200 but it’s an ex rental car (unknown to me until I purchased vehicle so that means the valuation drops by £2000 before we even start.
Account total is over £16000
Early settlement is £12089 but no way of getting that together.
They’ve offered voluntary termination as an option but I haven’t paid 50%

Eh? Who's deducing that and how?

Why not ring the people you bought it off and ask them to give you a trade valuation on the car with a view to buying it back for stock?

molerat

So the car is worth £7000

ET = £12100 + costs - less than £7000 = £???? to fund.
VT will cost you £6500 = £6500 to fund.
Settle = £12100 = £5100 to fund.

The more you can get for the car reduces the funding gap for settlement.

neilmcl

motorguy wrote: »

The second part of your sentence kind of elaborates a bit, but the first bit is wrong. You can VT at ANY point from day one. The finance company can only pursue you for up to 50% of the total transaction cost, which includes any deposit made, contributions, payments made etc.

Exactly this. A common misconception is that you have to have paid off 50% before triggering a VT, this simple is not the case.

Cetshwayo

Why not see if your new company will give you a car allowance and carry on driving it for x months until you can extract yourself with little or no penalty?

boundy

Stick it on tootle and see what local dealers are offering. You will get a much better offer than webac, you can then pay that dealer the ballance to ET