Car stolen - help

lopsyfa

AdrianC wrote: »

At the end of the term, you have a choice.
You hand it back, and the finance company can do as they will their car. You do not get the £10k advance payment back.
You hand them £20k, and you can do as you will with your car. Including selling it for £30k, if you can.

But, alas, the car is written off before the end of the agreement.
The finance company get the £20k contracted value. They are in the same position as if you'd paid the balloon to buy it from them.
You get £0.00. You are in the same position as if you'd handed it back.
Everybody walks away equitably.

The key word in the argument is the word choice above. The customer should have a choice of keeping the car (in this case the current value of the car) and settle the agreement. By just paying the settlement directly to the finance company, it can be argued that the OP is not being given the choice of keeping the car (or its current value).

In the PCP( a form of hire purchase), the finance company can't exercise certain rights of ownership and the OP is still the 'owner' of the car but the finance company has an interest in it. It is different for a lease. For example, the finance company can't:

1. call back the car anytime they like if the OP has not broken the agreement
2. not allow the OP to pay off the car anytime he or she likes

So the argument that the OP has zero interest or ownership right of the car is not correct. Before the end of the agreement, the OP owns any positive or negative equity in the car, It can't be right that he has to look for the balance if the settlement has been more than the value of the car but can't get any equity back otherwise.

Tokk

Colloquially atleast, the whole point of insurance is to put you back where you were before the incident...

In this case, wouldn't that require enough to enter into a PCP deal that replicates the position they were in before?
Would the OP need a £10k deposit to PCP a used car of equivalent age/mileage/spec at a similar monthly rate?

unholyangel

AdrianC wrote: »

What insurable interest does the OP have in the car?

Their financial liability to the finance company in remaining payments and the financial investment they've made in the car via payments they did make.

Why are you arguing that the insurers liability is to the finance company (and to them only)? Would the insurers pay out the amount of the outstanding finance if it was greater than the market value? No, because your insurers liability is not determined by your liability to the finance company.

Also, there are many heads for damages. One of those is loss of chance/opportunity.

SallyDucati

AdrianC wrote: »

I think you're misunderstanding what a PCP is...

The "deposit" isn't a deposit like a rental deposit - it's an advance payment that reduces the amount you borrow. If the car is handed back, either through VT or at the end of the PCP, it doesn't get returned. It simply reduces the amount you borrow, so the amount you pay interest on.

There is no "capital" payment as part of a PCP, balloon excepted, so you can't overpay. Monthly payments are solely interest on the amount borrowed - which is the full original purchase price less the advance payment. The balloon, the residual value at the end of the term, is within that borrowed money, so you pay interest on them.

The balloon is optional at the end - it's buying the car from the financier. GMFV = Guaranteed Minimum Future Value. If the car has depreciated more than expected, you simply hand it back and walk away. If you want to buy the car from the financier, that's the amount you will pay.

Let's say you PCP'd a £50k new car.
You put £10k advance payment/"deposit" in. You finance the remaining £40k. There's a £20k GMFV/balloon.
Over the term, you pay interest on the £40k - but we'll ignore that amount here, because it's not relevant.
At the end of the term it's expected to be worth £20k, an amount written into the contract at the start.
It has depreciated by £30k, and you have financed that £30k (£10k of it up front, £20k borrowed) plus the £20k retained value.

At the end of the term, you have a choice.
You hand it back, and the finance company can do as they will their car. You do not get the £10k advance payment back.
You hand them £20k, and you can do as you will with your car. Including selling it for £30k, if you can.

But, alas, the car is written off before the end of the agreement.
The finance company get the £20k contracted value. They are in the same position as if you'd paid the balloon to buy it from them.
You get £0.00. You are in the same position as if you'd handed it back.
Everybody walks away equitably.

Ok, so from my example earlier -

Car value on sale is £17.5k
Deposit £7k
PCP loan £10.5k

Car gets stolen a month later.
Insurance settlement Value £15k (finger in the air figure assuming some reduction)
PCP loan is £4.5k less than the insurance settlement value
What happens to that £4.5k?

foxy-stoat

unholyangel wrote: »

Their financial liability to the finance company in remaining payments and the financial investment they've made in the car via payments they did make.

Why are you arguing that the insurers liability is to the finance company (and to them only)? Would the insurers pay out the amount of the outstanding finance if it was greater than the market value? No, because your insurers liability is not determined by your liability to the finance company.

Also, there are many heads for damages. One of those is loss of chance/opportunity.

I have given up, so should you.

I hope the OP comes back and updates this thread with whatever outcome they get - be it £10,000 in the bank , no debt and no car or no money, no debt and no car.

AdrianC

lopsyfa wrote: »

The key word in the argument is the word choice above. The customer should have a choice of keeping the car (in this case the current value of the car) and settle the agreement. By just paying the settlement directly to the finance company, it can be argued that the OP is not being given the choice of keeping the car (or its current value).

Yes, exactly. That choice does not exist any more, because the car no longer exists.

Insurance never covers consequential losses. EVER. And that's what the OP saying "But I could have made £10k by paying the balloon then selling it" would be.

lopsyfa

AdrianC wrote: »

Yes, exactly. That choice does not exist any more, because the car no longer exists.

Insurance never covers consequential losses. EVER. And that's what the OP saying "But I could have made £10k by paying the balloon then selling it" would be.

I disagree. No point in arguing this, let’s hope the OP update us on the outcome.

unholyangel

AdrianC wrote: »

Yes, exactly. That choice does not exist any more, because the car no longer exists.

Insurance never covers consequential losses. EVER. And that's what the OP saying "But I could have made £10k by paying the balloon then selling it" would be.

I don't think you understand what consequential loss is. That's not a dig - many solicitors don't grasp it either.

Damages are recoverable under 2 limbs. Direct losses and indirect losses - aka consequential losses.

Direct losses are those that arise naturally from the breach and would be obvious to the world at large - that such a loss could result from such a breach.
Indirect/consequential losses are losses that wouldn't naturally arise from such a breach but from the special circumstances of that particular case.

Many a solicitor has drafted terms thinking certain damages are consequential when they are in fact, direct (hence my comment above). And therefore are not covered by any consequential loss clause.

I would suggest this would be a direct loss rather than consequential. Especially with how commonplace these types of financing agreements are.

Mercdriver

AdrianC wrote: »

Exactly. The OP could not have sold it for a penny. IT WASN'T THEIR CAR. To sell it, they would first have had to buy it from the owner - by paying... the settlement value. This is the market value to the owner, because it's what they'd have received if they sold it tomorrow.

The owner receives the payout. The owner is happy with the payout. Everybody's happy.

Except the person renting the car, who thinks they deserve ten grand because they maybe could have made ten grand if they bought the car before it was nicked...

But this takes no account of any deposit the OP made which is separate from the settlement figure, plus any overpayments.

esmerobbo

I would assume the settlement figure to the PCP owners would be the outstanding payments plus the value of the car.

Why would they take a hit by settling for the outstanding payments and have no asset at the end of the lease?

The way it has been explained is the lease company have sold a car lets say worth £30k they lease it to you for 3 years for £20k and at the end you pay £10k or give it back and they sell it for £10k, yet the OP claims the company have excepted the £20k?

Is the £20k the residue of the lease plus the £10k asset the vehicle?

Can not see why a lease company would accept the outstanding payments alone and lose their asset.