Car finance voluntary termination and covid payment break, help please!

nowhereboy

Hey, 

Just looking for some advice prior to contacting the finance company (money barn).

Recently voluntarily terminated a vehicle as more than half of the balance was paid. Car was in immaculate condition and had less millage than expected. Car was collected and all seemed well. 

I've now received a bill through the door for £1,080. The company have stated because we took a three month payment break during covid this is classed as arrears and needs to be paid now the accounts settled, included in the £1080 is another monthly DD as they stated this was our final DD (despite not owning the car at this point).

I feel these charges are unacceptable, we have paid half of the finance agreement as per contract and at no point did anyone advise us this payment break would be added onto final balance should the car be handed back early. Had we known this information we could have terminated earlier as we deliberately held off until we'd paid half the balance.  I've managed to find a similar thread on legal beagles in which the OP experienced exactly the same issue with money barn and after raising complaint etc they removed the "arrears" for the payment break from his final bill, resulting in a balance of £0.00. The attitude on legal beagles was that this is an untoward practise, they highlighted this company has previously been fined to the tune of millions by the FCA for other unfair practises.  

I'm hoping this can be resolved quickly and would appreciate some advice on how best to approach this. I feel the company is trying its luck, I do not intend on paying this bill, however we have worked very hard to build our credit score and do not want it ruined. Can they mark our file while this dispute is ongoing if we refuse to pay? Or would it have to go through a court first? 

Any advice is welcome 

thanks

[Deleted User]

It's correct that the missed payments need to be made up. They will also mean that more interest is owed than your original contract, s that will be a part of the final settlement.

nowhereboy

I have no problem paying the interest, however we could have handed the car back three months ago had we been advised the payment break would be considered arrears. We we're told it would be added onto the end of the payment term and at no point were we advised this will effect us should we voluntarily terminate the contract. 

I do not feel we have been treated fairly, we have been penalized for taking a payment break, essentially these arrears mean we will have paid four payments over the necessary 50% of the balance needed in order to terminate contract. 

As stated in original post I have saw other people fight this scenario and win. 

nowhereboy

As stated in OP I was hoping for some advise on how best to approach it with the lender but more importantly need to know if they can harm my credit score while this is in dispute. 

Thrugelmir

How did you expect the arrears to be cleared? 

nowhereboy

I was specifically advised the payment break would be added onto the end of the term and not considered arrears. 

I waited three months prior to terminating the agreement to ensure 50% of the balance was paid. Had I been advised the payment holiday would be considered arrears and need to be paid following a VC I could have handed the car back three months earlier and then paid the "arrears" to bring me up to 50%. 

sourcrates

They will mark your credit file as per data protection guidelines, if you are in arrears, then it will be reported as such.

The fact they did not specifically mention the missed payments would be classed as arrears, is another issue entirely.

I expect the "advice" was offered over the phone, rather than by written means, doesn't matter what they tell you in person, its what is written down that counts.

So if you remain unhappy about this situation, then you are free to utilise their complaints procedure, just like anyone else, put your concerns in writing, tell them why you have reason to complain, what you expect them to do, and what they can do to put things right, and then forward to the complaints dept. at Moneybarn.

nowhereboy

Thanks. 

Yes the advice was verbal, however we haven't received anything in writing regarding this either. The "payment break" terms and conditions can now be viewed on the company's website however these were published after our payment break was accepted and obviously after our original loan was taken.

I work for a financial company, we are incredibly careful to ensure customers are given all of the necessary information before taking any actions, verbally and followed up in writing. We would not in a million years do this to our customers. Neglecting to mention or put in writing that the agreed payment break would be considered arrears and need to be paid following a VC is crucial information that they failed to provide me. As part of our complaints process we'd also listen to the call recording and if a customer has been misadvised this would indeed be taken into account. 

I have sent an email requesting the balance be reduced on these grounds and asked for the matter to be raised as an open complaint if not resolved. 

nowhereboy

Update - Found the data released to motor finance company's from the FCA regarding covid payment breaks and it states - 

"an agreement made on or after 27th April 2020 under which the firm permits a customer to make no payments or reduced payments under the agreement for a specified period without considering them to be in arrears" 

Might be useful in future if someone comes on here asking the same question. This should have been a payment deferral (like we were advised it was at the time) and not considered arrears.   

Aran76

You haven't posted any details regarding the vehicle and it's value, but I'm surprised that people are VT'ing at this time. With the current boom in used car values, the majority of cars will currently have a nice chunk of equity at around the 50% paid off/agreement mark. 

The_Fat_Controller

You ended the "term" therefore any payment breaks are due to be paid.