Protection on purchase of new car under section 75a

paul1985

Hi all, newbie here but looking for some advice regarding protection of the purchase of a new car under section 75a.  The car I'm interested in is over £30,000 so cant be protected under section 75.  However, from my understanding if I get a loan on the vehicle setup by the dealership I would be protected under section 75a.  I've  explained this to the dealer and that the loan could be for as little as £1 for me to be protected (which I believe is true?) and they seemed a little sceptical but agreed in person before I left the dealership that we could do the loan for £1 and I would pay the rest as cash. They sent me a link to pay for a deposit but I wanted the agreement for the loan in writing but they've now said the minimum loan amount on one of their vehicles is £4000.  Anyone have any experience of this?  Am I in a position to say, I want the loan for £1 or i'll walk or is this a standard procedure that I would have to take a much larger loan the I even need and incur the loan costs just to protect my purchase.  I've heard a few horror stories where a car has gone wrong and the manufacturer has point blank refused to change the car and denied anything is wrong with the car.  The last thing I want to do is spend such a huge amount of money on a car and then run into this kind of issue.  Any help would be greatly appreciated! Thank you in advance!

Keep_pedalling

No finance company will do such a small lone. Why would any company take on such a silly risk.

You are buying a new car with a manufacture backed warrantee covering several years, and you are free to use any main dealer to carry out warranty repairs, so what more protection do you need.

DrEskimo

Not only do you have a warranty, you are also covered by the consumer rights act. I short, The Consumer Rights Act allows for three options:

Your short-term right to reject, which lasts for 30 days after taking delivery of your car

Your final right to reject, which covers you for six months from purchase

Your final right to reject after the first six months

https://www.thecarexpert.co.uk/rejecting-a-car/

Basically buy the car outright and enjoy it....

paul1985

Thanks both.  That gives me the assurance I needed.  Going to buy it outright.  Thanks!

Grumpy_chap

Take the loan.  Get the S75 protection.
Also any other incentives for taking finance.  Then pay off straight away so avoiding interest charges.

Manxman_in_exile

Grumpy_chap said:

Take the loan.  Get the S75 protection.
Also any other incentives for taking finance.  Then pay off straight away so avoiding interest charges.

Probably a stupid question, but if you pay the loan off straight away, are you still protected by s75?

Sandtree

Manxman_in_exile said:

Grumpy_chap said:

Take the loan.  Get the S75 protection.
Also any other incentives for taking finance.  Then pay off straight away so avoiding interest charges.

Probably a stupid question, but if you pay the loan off straight away, are you still protected by s75?

As long as you pay it rather than cancel it, yes

Keep_pedalling

Grumpy_chap said:

Take the loan.  Get the S75 protection.
Also any other incentives for taking finance.  Then pay off straight away so avoiding interest charges.

Doing that in the first 14 days would in effect cancels the finance, going beyond 14 days will almost certainly involve penalty payments of some kind. 

born_again

>>>

https://www.legislation.gov.uk/ukpga/1974/39/section/75A#:~:text=(1)If the debtor under,subsection (2) are met.


75A

Further provision for liability of creditor for breaches by supplier

(1)If the debtor under a linked credit agreement has a claim against the supplier in respect of a breach of contract the debtor may pursue that claim against the creditor where any of the conditions in subsection (2) are met.

(2)The conditions in subsection (1) are—

(a)that the supplier cannot be traced,

(b)that the debtor has contacted the supplier but the supplier has not responded,

(c)that the supplier is insolvent, or

(d)that the debtor has taken reasonable steps to pursue his claim against the supplier but has not obtained satisfaction for his claim.

(3)The steps referred to in subsection (2)(d) need not include litigation.

(4)For the purposes of subsection (2)(d) a debtor is to be deemed to have obtained satisfaction where he has accepted a replacement product or service or other compensation from the supplier in settlement of his claim.

(5)In this section “linked credit agreement” means a regulated consumer credit agreement which serves exclusively to finance an agreement for the supply of specific goods or the provision of a specific service and where—

(a)the creditor uses the services of the supplier in connection with the preparation or making of the credit agreement, or

(b)the specific goods or provision of a specific service are explicitly specified in the credit agreement.

(6)This section does not apply where—

(a)the cash value of the goods or service is £30,000 or less,

(b)the linked credit agreement is for credit which exceeds £60,260 [F2and is not a residential renovation agreement], or

(c)the linked credit agreement is entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.

[F3(7)Article 60C(5) and (6) of the Regulated Activities Order applies for the purposes of subsection (6)(c).]

(8)This section does not apply to an agreement secured on land.]<<<

Forget the £1 loan. You will be looking at the full amount.

You would be better speaking to someone that is a expert in this area (FOS maybe a good start)

Sandtree

born_again said:
Forget the £1 loan. You will be looking at the full amount.

You would be better speaking to someone that is a expert in this area (FOS maybe a good start)

There are many reasons why to forget the idea of trying to get a £1 car loan but what out the text you quoted was relevant to a £1 loan being inappropriate?

FOS don't provide free legal advise

Manxman_in_exile

I also wondered what point born_again was making about the legislation (or maybe I'm being stupid again).

s75(a) only seems to say that the loan can't exceed £60260 and that the cash value of the goods must be greater than £30k.  Doesn't mention a minimum credit/loan amount. 

The only thing I can see is in 75(a)(5) where it says the loan must be exclusively to finance the purchase of specific goods.  Could it be argued that a loan for £1 can't be exclusively for the purchase of specific goods whose value is in excess of £30k?  But so long as the £1 doesn't contribute to the purchase of anything else(!) I don't see why it can't be exclusively for the purchase of a £30+k car?  (ie you can't buy anything else with the loan, but the loan doesn't have to fund the full price)