Car HP 4 June 2021 at 9:01PM in Loans 2 replies 191 views

welshwizard1

I have a car on HP but, to be honest, payments are now more than I can afford. I took out the HP over 5 years and have paid for 3 years.

I’ve heard I can return the car as I’ve paid more than half and wondered the folllowing:
1. Is it easy to arrange.
2. Does it adversely affect my credit record and would it stop me getting new finance on a less expensive car?
Thanks in advance

Grumpy_chap

To exercise VT (Voluntary Termination) you would need to have paid over half of the total payable, including any balloon payment.  Does your finance include a balloon payment?  

Before deciding to VT, have you requested a "settlement figure" from the finance company?  
Could you sell the car for more than the "settlement figure"?

If you pan to get a less expensive car, how much less are you thinking?

MobileSaver

welshwizard1 said:

I’ve heard I can return the car as I’ve paid more than half

To be absolutely clear, as @Grumpy_chap said, you need to have paid half of the total amount payable (including interest and charges etc.) so it's not just half of what you borrowed or half-way through the five year term.

welshwizard1 said:

1. Is it easy to arrange.

Very easy, just notify the lender in writing that you wish to "invoke my statutory right under section 99 of the Consumer Credit Act 1974 to terminate the agreement" and give them a reasonable period (say 14 days) to arrange collection or delivery of the vehicle.

welshwizard1 said:

2. Does it adversely affect my credit record and would it stop me getting new finance on a less expensive car?

No it does not affect your credit record. It may stop you getting finance with the same lender as they may be unhappy if they take a hit on the current deal but shouldn't affect finance with a new lender.