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

~Brock~

The liability at the point of VT'ing a HP agreement is all sums due up to that point, or 50% of the total amount payable if less than half way through the term.  The FCA instruction to lenders was not to treat missed payments under these circumstances as 'arrears' for the purposes of treating them as overdue, but this does not change the fact that under the Consumer Credit Act they need to be treated as missed payments for the purposes of calculating balances and sums owed.  This is why there was the ridiculous situation of lenders having to send statutory arrears notices whilst also telling customers to ignore them. 

This is set out in s100(1) of the CCA 1974.

100 Liability of debtor on termination of hire-purchase etc. agreement.

(1)Where a regulated hire-purchase or regulated conditional sale agreement is terminated under section 99 the debtor shall be liable, unless the agreement provides for a smaller payment, or does not provide for any payment, to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination

I've highlighted the important bit, and whether they are treated as arrears or not, or whether you like it or not, the sums were due under the terms of the original agreement.

Bottom line is.....they are correct and the money is owed.

nowhereboy

That legislation is prior to covid and this is a circumstance out of the ordinary. I can’t see anything regarding this on the covid guidance to businesses from the FCA? New guidance was issued around these payment breaks hence my earlier post, I’m aware of the standard rules but this isn’t a standard situation. The VT rights mean only 50% of the balance must be paid and in this case I will have paid 4 payments over what was required due to this. 

Regardless, The FCA also states customers must be treated fairly and that was not the case here. You can’t tell customers you’re giving them a payment break and that its not classed as arrears, provide no documentation or information which in turn lead the customer to make a decision which was not in their best interests. I did receive the letter regarding arrears and rang to ask about VT at the time and they specifically told me this would not effect things or be considered an arrears ballance.

I would have terminated the contract on the spot had I been advised correctly.

Clearly the forum is in disagreement but thats life. I’ll keep this thread updated for the purpose of others in the same boat. 

~Brock~

nowhereboy said:

The VT rights mean only 50% of the balance must be paid and in this case I will have paid 4 payments over what was required due to this. 

I don't believe that you have actually read, or understood, what I posted above. 

Under VT the liability is all payments that were due up to that point and I think you are getting fixated on the idea that 50% is all that you ever need to pay to VT.  That is not the case because if you are already over half way through the term you still need to pay the payments that were due up to the point of VT. 

If you hadn't taken the payment holiday then you would now have nothing extra to pay.  I'm sure you do realise that the payments you had a break from would have needed to be paid before the agreement ended.  Ending the agreement by VT'ing it doesn't change that fact - you can't have your cake and eat it.

Furthermore, they are not classing the 4 payments as an 'arrears balance'.  If they were they would be chasing you for it.  The missing payments are simply part of the amount required to be paid under the VT rules, as clearly set out in my previous post.  Your confirmation bias does not change this I'm afraid, sorry.

nowhereboy

No I read it. I think you’re missing my point tbh. I made them aware when discussing the payment break that I wanted to VC but was waiting until I’d paid half before doing so. They should have told me at time the payment break would need paid when the account was closed. Not told me “this won’t effect you and the arrears will only be paid at the end of the balance if you keep the car”. Had I been given the right info I could have took a payment break elsewhere and cancelled this months ago. 

This isn’t about having my cake and eating it. I’ve held onto a car I didn’t need for three months (waiting to hit 50%) because I was wrongly advised and as a result will have paid over 1k more than what was necessary to end my agreement. 

~Brock~

nowhereboy said:

This isn’t about having my cake and eating it. I’ve held onto a car I didn’t need for three months because I was wrongly advised and as a result will have paid over 1k more than what was necessary to end my agreement. 

I do understand what you are saying - you have kept a vehicle longer than you intended to and made 3-4 additional payments for the privilege - so by all means make a complaint on those grounds.  All I am doing is pointing out the flaws in your belief that payments missed during a payment holiday shouldn't need to be paid as part of a VT. 

What your lender did or didn't say to mislead you is something that this forum can't really help with, but if they have a record of this conversation then that should get to the bottom of any wrong advice.

nowhereboy

Ok I now understand where you are coming from, thanks 👍

MEM62

nowhereboy said:

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%. 

 But you didn't get to the end of the term.  You VT'd early so the payments need to be made now.  What did you expect, that they would just disappear?  

nowhereboy

Read my posts please. They specifically told me these payments would only be made if I kept the vehicle. I outright told them my plans to terminate and they gave the wrong information which lead to me making the wrong decision.

As a customer you tend to listen to the information given from the company.