PCP Finance Settled Incorrectly

Foumba

I have had a car finance agreement for 4 years. I ordered a new car in 2021, which is still not ready, so recently completed the second 12 month extension until my new car is ready.

Yesterday I received a letter stating ‘your agreement has now been settled’ and ‘we no longer hold a financial interest’ in the vehicle.

today I contacted the financial services company and they have confirmed the same, I owe them no money and the car is now mine.

This is an error as I have not paid the settlement figure and recently completed the extension. Without informing the dealership of this “error”, am I legally clear of any liability if I cease further monthly payments (if requested) or hypothetically, sell the car?

As you can imagine, it would be great if I could “get away” with this error but I don’t want to be stung at a later date.

Any advice would be appreciated.

MalMonroe

You know the answer to this already and don't really need any advice - your conscience is showing. (That's a good thing.)

If you know that an error has been made then it is up to you to report it. Anything else is dishonest.

If you were unaware of the error then that would be an entirely different matter. But you aren't unaware.

You must know that no-one on this forum is going to condone theft.

Just own up. Do the right thing. You know you want to. (And so do I because - conscience).

MorningcoffeeIV

Foumba said:

Without informing the dealership of this “error”, am I legally clear of any liability if I cease further monthly payments (if requested) or hypothetically, sell the car?

No. The money is still owed.

Grumpy_chap

Foumba said:

I have had a car finance agreement for 4 years. I ordered a new car in 2021, which is still not ready, so recently completed the second 12 month extension until my new car is ready.

Yesterday I received a letter stating ‘your agreement has now been settled’ and ‘we no longer hold a financial interest’ in the vehicle.

today I contacted the financial services company and they have confirmed the same, I owe them no money and the car is now mine.

This is an error as I have not paid the settlement figure and recently completed the extension. Without informing the dealership of this “error”, am I legally clear of any liability if I cease further monthly payments (if requested) or hypothetically, sell the car?

As you can imagine, it would be great if I could “get away” with this error but I don’t want to be stung at a later date.

Any advice would be appreciated.

Someone has made an admin error.  
That does not mean that the balance is no longer owed, nor that the balance is now interest free. 
At some point the finance company will be in contact to correct their error.
Ideally, you need to continue making the payments to schedule.
If that is impossible (because of procedure at the finance company), then the second-best thing you can do is to put the money that would have been used making the monthly payments into a secure place (that you won't draw down and spend) and then you at least have the money to make a catch-up payment once the finance company recognise their error.

silvercar

I agree that eventually you will need to pay this. 

I would be getting a valuation on the car and seeing if that is greater than the settlement figure.

what car has lead times delayed so much? Are they honouring your original lease quote?

lopsyfa

What type of finance agreement do you have? I am going to assume it is a PCP and not a lease.

It is possible that by extending the end of the PCP, you have eventually paid of the balloon. 

PCP is different and unlike a lease where you can never fully "own" the car by paying the lease monthly. Therefore, it is possible for the scenario you describe to occur.

Let me illustrate with a simplified example of £30k with £15k balloon. Assume you are paying £1000 monthly and decide to extend your PCP by 24 months (2 x 12 months PCP extension). By the 15th month, you will technically have paid the £15k off and the finance company will have no interest in the car anymore. Remember this is a hypothetical case and I will expect, when you extend the finance, for there to be some documentation/communication of a new loan on the balloon.

If we know some numbers, type of agreement, balloon amount if PCP, monthly payment and interest rate, it is possible to guess what has actually happened. 

So, while I am not saying that is what happened, I will advice you to get in touch with the finance company again to ask for why they think you have paid it off and the payment/balance history instead of just praying to get away with their "error". I think they should be providing the statement at least once every year.