Hire Purchase Loan For Business

MissJoanna

Hi There.

Last year I needed to get a loan for corporation tax for my one person business. I was also going through a lot of issues, including being the victim of a crime and having health problems (which are now much worse).

At the time I told I was getting a loan with an interest rate of 40% with my Mum's flat, which I own a part of, was the guarantor.

The person I dealt with on the phone was really nasty, at once point he said to me, "Don't worry, it's fine, if you can't pay us we'll just take your Mum's flat, it's not a problem".

My Mum lives there exclusively.

I talked to him a lot to get this arranged - he refused to let me talk to anyone else in the department.

Towards the end of the machinations, he told me he needed pictures of some of my business equipment for the underwriters to prove I was a business (I'm a one person contractor with a limited company).

Then a man came round and got us to sign the paperwork, but didn't leave us enough time to really read it.

Only afterwards did they send a copy of what we had signed in very small print and I have to be honest, because of my health I only just read it properly recently.

The items listed in the contract finally were:-

Laptop model x
Phone model x
1 X White able (mispelled and there was no white table)
1 X White wooden chair (there was no white wooden chair)
1 X Blue Carpet Througout (There was no blue carpet anywhere)
1 X Black Tablet model x
1 X Power supply for laptop

"This equipment schedule includes all general items and goods, accessories, shop fittings including all fixtures and fittings withing the business all equipment is used"

This was my Mum's flat and that isn't even mentioned on the contract, despite them now being listed on the land registry as 'lenders'.

It is a hire purchase agreement, not a loan.

They are on the land registry as lenders and despite paying them back £410 a month (with some months it being up to £605) for 15 months, on a £10,000 loan, I still owe them £12,820.

Given that my health is getting worse, this is becoming very scary, as I'm running out of work and though I may find new contracts, I am not as able as I was.

They lied to me and I was stupid and desperate, but it seems to unfair that they can operate like this.

Does anyone have any thoughts?

[Deleted User]

It sounds like you're out of time to withdraw from the contract. When did you sign the agreement?

Your options are likely to be between maintaining payments, refinancing elsewhere, or defaulting.

If your mum is going to be left paying the loan, you should talk to her. She may want to get cheaper finance and clear the loan. if she's going to end up paying it in any event.

MissJoanna

This was signed last summer, so quite a long time ago.
How can they sell a loan that isn't a loan? It seems so cruel - the whole thing was designed to confuse and hide the reality of what they were offering.

Gaz83

MissJoanna wrote: »

This was signed last summer, so quite a long time ago.
How can they sell a loan that isn't a loan? It seems so cruel - the whole thing was designed to confuse and hide the reality of what they were offering.

It's a harsh lesson to learn, but you really should have taken the time to read and understand the agreement before signing it.

MissJoanna

I agree of course, but they used very deceptive tactics and made it hard for me to read it even, as they rushed me into signing it after lying to me for weeks.

MissJoanna

Where is the sentiment around how the company is question has acted? I can take responsibility for my decision, I get that, but why is no one commenting on the practice of this company?

[Deleted User]

Because we're offering practical advice, rather than sentiment.

Yes, they should have made you aware of what you were signing, but that doesn't help you.

[Deleted User]

MissJoanna wrote: »

Where is the sentiment around how the company is question has acted? I can take responsibility for my decision, I get that, but why is no one commenting on the practice of this company?

We can't offer sentiment only advice, have you been in touch with the management of the lender to voice your concerns, why did you go for such a bad deal? were you unable to get finance from a reliable source e.g a bank? And finally if you are a limited company why would you use a property you don't fully own to get finance/hp ?

MissJoanna

Have you been in touch with the management of the lender to voice your concerns

You ask this as though I would be talking to a reasonable party. They already lied to me and showed the lowest of ethical standards. They are sharks - and I am scared that if I talk to them they will infer that I cannot pay them back. They have rights to investigate things.

Why did you go for such a bad deal? were you unable to get finance from a reliable source e.g a bank?


As I said, I was desperate and I could not get a loan for this amount via normal channels and was already in a state of crisis in my personal life. I was lied to.

And finally if you are a limited company why would you use a property you don't fully own to get finance/hp ?

Firstly, I didn't know I was signing a 'hp' finance agreement - I didn't even know such a thing existed.

My Mum and I agreed it was the only way to pay off the corporation tax, and given that I have shares in her property and had a Director's loan, I risked becoming bankrupt and having the receivers force my Mum to sell. It was a joint decision.

MEM62

MissJoanna wrote: »

Where is the sentiment around how the company is question has acted? I can take responsibility for my decision, I get that, but why is no one commenting on the practice of this company?

Nothing we can say on that point will help you. Perhaps you had these concerns before entering the agreement, in which case your 'inner voice' should have prevented you from signing. Once you have committed yourself it is too late to consider how they have acted and remember, you were the one asking them for money.

MissJoanna wrote: »

You ask this as though I would be talking to a reasonable party. They already lied to me and showed the lowest of ethical standards. They are sharks - and I am scared that if I talk to them they will infer that I cannot pay them back. They have rights to investigate things.

If you feel that their behaviour has not been appropriate, that you were mislead and that is an avenue that you with to pursue then you need to contact them in the first instance as you will need to go through there complaints procedures before options open up to take the matter further.

As I said, I was desperate and I could not get a loan for this amount via normal channels and was already in a state of crisis in my personal life. I was lied to.

I am not sure why you would need to borrow money for corporation tax. Tax is based on you company's profit. If you were making sufficient profit to be assessed for tax the company had sufficient income to pay it. Could there have been an error in your assessment for corporation tax?

Firstly, I didn't know I was signing a 'hp' finance agreement - I didn't even know such a thing existed.

HP - as in Hire Purchase, is finance secured on an asset, such as a car or equipment/machinery that is used in the business. The loan you have sounds like it is a secured loan rather than HP. I would suggest you check your documents to see exactly what you are dealing with here. If it is HP then what asset is it secured against? It cannot be your mother's house.

My Mum and I agreed it was the only way to pay off the corporation tax, and given that I have shares in her property and had a Director's loan, I risked becoming bankrupt and having the receivers force my Mum to sell. It was a joint decision.

Most debt problems don't arise overnight. The develop over time as individuals gradually dig a deeper financial hole for themselves. The earlier you stop digging (ie borrowing) the easier it is to extract yourself from the situation. Once you were in a position where mainstream credit was no longer available and your only recourse was loans at 40% interest it was time to stop borrowing and look at alternative solutions to your problem. I would suggest that you speak with one of the debt charities to discuss your circumstances as I am sure that they will have some good advice to offer. They may also refer you to the business debt line as this is related to your company.

You will not be the first person to make a decision having felt that they were backed into a corner. The important thing now is that you do not compound that error further. Take a breath, take some advice and a way forward will present itself.

I hope that you get things sorted.

MissJoanna

Hi MEM62
Nothing we can say on that point will help you. Perhaps you had these concerns before entering the agreement, in which case your 'inner voice' should have prevented you from signing. Once you have committed yourself it is too late to consider how they have acted and remember, you were the one asking them for money.

I didn't have these concerns, or I would not have entered into the agreement. Hindsight is 20/20, so are these replies.

If you feel that their behaviour has not been appropriate, that you were mislead and that is an avenue that you with to pursue then you need to contact them in the first instance as you will need to go through there complaints procedures before options open up to take the matter further.

So you're suggesting that a company that routinely lies and sucks in vulnerable people into a deal they explicitly lie about is going to answer the phone and say, "Oh, yes, sorry for lying to you and bullying you over the phone, we really have felt very guilty about that, please accept our most sincere apologies and here's a pink cloud for you to sleep on". I think not.

I am not sure why you would need to borrow money for corporation tax. Tax is based on you company's profit. If you were making sufficient profit to be assessed for tax the company had sufficient income to pay it. Could there have been an error in your assessment for corporation tax?

You are incorrect. My company accounts were correctly showing a profit from the previous year, as I have very few running costs (online services based business). What had happened was that by the time the tax bill was due, I had spent more than I should have. That's a separate issue to the validity of the tax return.

HP - as in Hire Purchase, is finance secured on an asset, such as a car or equipment/machinery that is used in the business. The loan you have sounds like it is a secured loan rather than HP. I would suggest you check your documents to see exactly what you are dealing with here. If it is HP then what asset is it secured against? It cannot be your mother's house.

Again, you are incorrect - it is not a loan - it's a lease agreement. This is what they lied to me about. And yes, their company name is now listed on the land registry as a lender, so while I wish you were correct about my Mum's flat not being secured against this, it is.


Most debt problems don't arise overnight. The develop over time as individuals gradually dig a deeper financial hole for themselves. The earlier you stop digging (ie borrowing) the easier it is to extract yourself from the situation. Once you were in a position where mainstream credit was no longer available and your only recourse was loans at 40% interest it was time to stop borrowing and look at alternative solutions to your problem. I would suggest that you speak with one of the debt charities to discuss your circumstances as I am sure that they will have some good advice to offer. They may also refer you to the business debt line as this is related to your company.

The only other option at that point was to allow the company to go insolvent, which would have meant myself going bankrupt due to having a Director's loan - this would in turn have meant the receivers coming after my Mum's flat, as I own a share. You are right that I had mounting financial problems and this was my attempt to turn things around, as had I not fallen more ill, I would have been able to make these payments for sure and though it would have been an expensive way out, it would have worked.

My state of health is the real deal breaker here, and the thing that has caused this rather desperate plan to not work. Unfortunately, we could not foresee that my health would deteriorate in the time that followed and though the consequences were high (my Mum and I both thought it was a loan with the property as a security), the risks were low, given my earning power and determination to do things different moving forward.

I may speak to business debt line again, but I am also seeking legal advice.

@MEM62 - thank you for at least your kind words at the end, despite some of the things you may have misunderstood - that is and was appreciated.

@The rest of the people who commented. You have added no value whatsoever. If you all had read more carefully what I said this would have been easier. Of course I take responsibility for getting to that point, but no one has acknowledged that I was in a personal crisis and fighting alone to sort this out. The lack of compassion and even basic comprehension of the facts I have laid out is quite disappointing overall.