Advice on Hire Purchase for Cars

Labradoodle11_2

I purchased my car through a local car company over two years ago. I used their finance and I have now been told that I can hand the car back to the finance company and they will write off any oustanding debt. Has anyone ever done this and does it have an adverse effect on your credit rating?

Please help!! :rotfl: :rotfl:

trafalgar_2

don't know about the affect on credit rating but my sis did this as she was struggling to pay anyway...........so it was the better option for her.

BenL

I doubt it affects your ability to get new credit.

This is what the Ford Options scheme etc are like.

You've probably paid more in payments in 2 years than the depreciation of the car so the finance company will be up.

They can sell the car again for less money than when you bought it but your payments have made up the difference.

Have you looked at how much you have left financed?? Get a quote for re-payment/ settlement off them.

Take a look on https://www.parkers.co.uk and autotrader to see how much cars like yours are going for.

If you can make money yourself sell it privately and write a cheque to finance co. If its not worth it hand it back and your home free as the car is worth less than what you owe (motorised negative equity).

Ben

YorkshireBoy

BenL wrote:

If you can make money yourself sell it privately and write a heck to finance co.

Can you sell a car that you do not own? I'm no expert but...

1/ Wouldn't you need permission from the finance house? Would they give it for a private sale?

2/ Garages/dealers will advertise "we buy any car - finance settled", but would a *private* buyer purchase the car knowing (either by the vendor informing them, or by the result of an HPI check) that it was still subject to finance. I know I wouldn't!

trace-j

Labradoodle11 wrote:

I purchased my car through a local car company over two years ago. I used their finance and I have now been told that I can hand the car back to the finance company and they will write off any oustanding debt. Has anyone ever done this and does it have an adverse effect on your credit rating?

Please help!! :rotfl: :rotfl:

Yes you can do it and no it won't affect your credit rating:j .

Under The Hire Purchase Act & Consumer Credit Act there are couple of things to protect the consumer as title of the goods still belongs to the HP company. If 1/3 of the total agreement is paid the item becomes 'protected goods'. As such the HP company must get a court order to take back possession of the items.

You are also only liable to pay for half of the total credit agreement. See page 35 of this OFT pdf. So if you want to cancel you just write to them stating you are exercising your legal right to cancel, you have paid 1/2 total agreement (you may be charged 1 months interest plus any cost of damage to goods). You can't harm your credit rating for exercising a legal right.

You won't get any money back, like deposits, it is effectively an expensive way to hire a car. They aren't doing you any favours, if anything, if the debt gets written off the car now it will have a higher value had you handed it back at the end of the agreement.

You can't sell the car on unless you pay the option to purchase at the end. If you did the repayments under the agreement will have to be maintained.