HP Car return 3 August 2022 at 1:18PM in Debt-free wannabe 14 replies 1.2K views

ontophp

Hi,
I bought a car on HP using Zopa. It seems in the first year Zopa use payments only for interest, so the principle is untouched. My finances are in a low spot and I'm wondering what to do. In the situation where one terminates or returns a HP vehicle, please do you know:
How long does that process typically take?
How and when do they calculate the vehicle's current value?
My vehicle is also due MOT and tax next month. Currently I'm not sure if/how I finance those.
I took on the HP when I was unwell.
Thanks

molerat

They do not set payments against interest only in the first year, they are not allowed to do that.  The interest is far higher in the early part of an agreement as the principal is higher so more of your monthly payment is set against interest. As you go along the principal decreases, slowly at first, until around the half way point when you start paying more off the principal than interest.

Your options are decided by how much of the agreement you have paid off.  If past the 50% of the total agreement amount paid off then you can voluntarily terminate which means you just hand the car back. If less than that you can early terminate which leaves you liable for any difference between what they get for the car and the settlement amount and costs. 

The best option is likely selling the car and paying off the agreement, have you had the car valued by WBAC, Arnold Clark etc or a local dealership and compared that to the settlement figure ?

You need to try and stick to your existing threads, you have many on pretty much the same subject.

ontophp

A year in it looks like about 1 month off the principal. Thanks for explaining. I've learnt they do a voluntary surrender which is similar they sell the car and I'd owe any difference between sale value and debt.

Thanks for suggesting WBAC it was helpful to get a quick idea. Do you know think auction selling prices end up very different to WBAC or is that a good indicator? I can't go to a dealership as apparently it needs FSH from dealer which it doesn't have.

WBAC gave a figure but the car is due MOT and tax soon. With current cash flow this is a challenge. But if they're not renewed the selling price gets further reduction, and if I was to sell I'd probably have a 5k debt on a vehicle I've already spent 4k in payments on, and no vehicle. There must be another way...?

I note your comment about threads.

Thank you

peteuk

ontophp said:

My vehicle is also due MOT and tax next month. Currently I'm not sure if/how I finance those.

Will it pass its MOT?…shop around find somewhere that does discounted MOT, a lot of places don’t charge for retest if they do the work.

Tax can be paid monthly, so if you do sell it you can stop the monthly payment.  So you don’t have to buy a full years tax, to then sell it a month in.  Even if you do then you can claim the rest of the year back.

The_Fat_Controller

WBAC will give you an indicative price.

If the finance settlement figure is more than the value of the vehicle they will buy it if YOU stump up the shortfall.

From their website

If you owe more on your finance than the value of the car, we will still be happy to buy the car, but you will need to pay us the shortfall by debit/credit card when we purchase your car.

ontophp

Thanks for these replies.

peteuk, I would expect it should do so but I don't know for sure. Thanks for the tax suggestion.

The_Fat_Controller, Thanks. Since there will be a shortfall, I wonder what payback demands they'll make (how the debt is different from when it was against the car).

sourcrates

ontophp said:

Thanks for these replies.

peteuk, I would expect it should do so but I don't know for sure. Thanks for the tax suggestion.

The_Fat_Controller, Thanks. Since there will be a shortfall, I wonder what payback demands they'll make (how the debt is different from when it was against the car).

Just becomes another unsecured, non priority debt, that`s all.

fatbelly

As above, if the situation is desperate, stop paying and voluntarily terminate under the consumer credit act. The process is explained here from a debt adviser perspective.

https://www.nationaldebtline.org/fact-sheet-library/hire-purchase-debt-ew/

and here

https://legalbeagles.info/forums/forum/legal-forums/motoring-parking/vehicle-finance-and-issues/77730-a-guide-to-voluntary-termination-your-rights

PaulW922

sourcrates said:

ontophp said:

Thanks for these replies.

peteuk, I would expect it should do so but I don't know for sure. Thanks for the tax suggestion.

The_Fat_Controller, Thanks. Since there will be a shortfall, I wonder what payback demands they'll make (how the debt is different from when it was against the car).

Just becomes another unsecured, non priority debt, that`s all.

That assumes that WBAC will buy the vehicle without the balance of the debt being cleared doesn’t it? I doubt they would do that as the lender would not release their interest in the vehicle, unless the outstanding debt were very small. 

peteuk

I believe that if your half way through the HP agreement you can return the car, you can also pay up to halfway, if your not there already (which doesn’t help if your struggling) 

The_Fat_Controller

@peteuk, I think you are mistaken, as far as I remember you can terminate and return the car after 50% of the payments have been paid, not halfway through the contract.

The OP has not actually said what is the outstanding or settlement amount, where they are in the contract term and what the WBAC valuation was.