Hire Purchase Agreement - Renegotiation

simon_eaton

Good afternoon

I am about 2.5 years into a 4 year hire purchase agreement on a Seat Ibiza (arranged through Volkswagen Financial Services) and I just wondered if anyone had any experience with renegotiating monthly costs and option to purchase price? My agreement is based on 20,000 miles per annum but given that I am working from home almost every day and will be doing for a while, my mileage at the end of the 4 years is going to be significantly less than forecast. I have paid over 50% of the loan and so I am entitled to return the car, but ultimately I still need it for work and I don't fancy committing to a new contractual agreement given present uncertainties. 

In short, I want to get in touch with VWFS to request that payments are reduced, otherwise I intend to return the car to them. Has anyone tried this before? Is it a waste of time? 

Thanks in advance for any advice.

AdrianC

Yes, of course it can be done.

The balloon will go up, because the car will be expected to depreciate less. The monthlies should come down.

Herzlos

Hire Purchase doesn't usually have a mileage limit as you own the vehicle at the end, it's irrelevant to them what condition it's in.

Is it a Personal Contract Purchase with an optional purchase cost at the end?

Anyway, the short answer is no. You can't threaten to return the car if they won't change the agreed amount. Have you paid over 50% of the total finance, including deposit? Your only real option would be to VT and get something cheaper.

By all means, contact them and see.

lopsyfa

I don't think it can be done. They already have an agreement with you and they are not going to do a new agreement that means they get less money.

Even if they agree, post-pandemic, the residual values of used cars are expected to be lower. This means more depreciation. Therefore if the finance is recalculated, the monthly cost may not drop much or may even increase.

simon_eaton

Herzlos said:

Hire Purchase doesn't usually have a mileage limit as you own the vehicle at the end, it's irrelevant to them what condition it's in.

Is it a Personal Contract Purchase with an optional purchase cost at the end?

Anyway, the short answer is no. You can't threaten to return the car if they won't change the agreed amount. Have you paid over 50% of the total finance, including deposit? Your only real option would be to VT and get something cheaper.

By all means, contact them and see.

The contract documents explicitly say Hire Purchase Agreement, unless it's poor wording from them. The way I read it is that I pay a fixed monthly cost of and in the final month there is an agreed final payment of just under £5k. This isn't mandatory though and if I don't pay then I have to return the car to them. Is that different from the usual Hire Purchase Agreement? I remember thinking at the time of purchase that the salesman seemed to understand the legal agreement even less than I did.

Thanks for your help - I have paid over 50% including deposit but probably need to do some mileage and finance calculations to see if it's worth the hassle. I imagine VT isn't a quick process so by the time it's done I may not have long left on my agreement anyway. 

lopsyfa

simon_eaton said:

Herzlos said:

Hire Purchase doesn't usually have a mileage limit as you own the vehicle at the end, it's irrelevant to them what condition it's in.

Is it a Personal Contract Purchase with an optional purchase cost at the end?

Anyway, the short answer is no. You can't threaten to return the car if they won't change the agreed amount. Have you paid over 50% of the total finance, including deposit? Your only real option would be to VT and get something cheaper.

By all means, contact them and see.

The contract documents explicitly say Hire Purchase Agreement, unless it's poor wording from them. The way I read it is that I pay a fixed monthly cost of and in the final month there is an agreed final payment of just under £5k. This isn't mandatory though and if I don't pay then I have to return the car to them. Is that different from the usual Hire Purchase Agreement? I remember thinking at the time of purchase that the salesman seemed to understand the legal agreement even less than I did.

Thanks for your help - I have paid over 50% including deposit but probably need to do some mileage and finance calculations to see if it's worth the hassle. I imagine VT isn't a quick process so by the time it's done I may not have long left on my agreement anyway. 

PCP is a type of hire purchase.