Early settlement on PCP. Do I need to pay 50% of Interest costs?

axil23

It’s in the company name. But when I applied under my name I was told via email there were no early repayment charges. When we moved it to company finance at no time was I informed that I would get charged 4 years interest if I decided to sell the car. 

In fact I have a record of 2 emails asking the broker if there were any early termination charges and they choose to not reply to them. He spoke to me on the phone and told me there were not. I realise that is hear say but when the broker tells you that all PCP's are able to be closed early without charges you take his expertise on that. 

I have read the finance agreement and that does not state it either. 

Ectophile

It's a business contract.  So you can't assume that the terms will be the same as for a consumer one.  You also don't have much in the way of consumer rights.  You agreed to whatever was in the contract you signed.

Nearlyold

Couple of points:- firstly there is nothing odd about the finance docs referring to your agreement being a "Conditional Sale". In regulatory terms there is no formal definition of a PCP, so the documents will refer to the type of finance agreement your PCP is based on, the most common underlying agreement being Hire Purchase then Conditional Sale then a Fixed Sum Term Loan (aka a Personal Loan). 

With regard to you having ended up with an unregulated Conditional Sale based PCP, usually the Brokers/Advisers would get you to sign a document confirming that you understand the ramifications of taking out an unregulated loan, in particular that the Early Settlement regulations will not apply with an unregulated loan. These type of loans are aimed at High Net Worth or Business customers who are prepared to forgo the protection of a regulated loan in return for a more competitive or flexible rate or when a standard consumer loan might not be available to them' 

In a legal sense there are no "charges" for early settlement as such, however as you have found there is no rebate or at best only a limited rebate of the interest due for the whole term of the loan.

axil23

Ectophile said:

It's a business contract.  So you can't assume that the terms will be the same as for a consumer one.  You also don't have much in the way of consumer rights.  You agreed to whatever was in the contract you signed.

There is nothing in the contract to state that it was unregulated. I was never asked to sign anything that said it was unregulated. In the agreement it doesn't state anything about charging full interest up front.

I realise what it is and what I have got myself in for but what I am trying to say is that I was miss sold this. 

When I asked the broker about early repayment he said they would only charge me interest up until the the point where I sold it. 

I have an email confirmation from broker when I emailed them asking them saying there would be no early payment charges a month before the purchase. I also have 2 emails that I sent him in the 2 days before the purchase asking for confirmation that I can sell it in 3 months without any early repayment charges.

On purpose he did not reply and instead called me to say that there wouldn't be. He knew I wouldn't have taken the unregulated agreement. 

So my question is do I have any legal recourse? 

axil23

Can anyone advise? 

Grumpy_chap

In what way do you think you were mis-sold?

You wanted finance that was not available in your own name.
You obtained the finance through your Ltd Co.  That is now business finance and the Ltd Co taking the finance is deemed to be resourced and knowledgeable to understand and assess the contract terms and make an informed decision.

The fact the finance is through the Ltd Co also means that you were not sold anything - the Ltd Co was sold the car and the finance.  It's not possible for you to have been mis-sold, only the Ltd Co., but that is unlikely because of the "knowledgeable client" status of the Ltd Co.

I apologise if I missed this, but what is the reason for wanting out of the car agreement after only 4 months?

jimjames

Grumpy_chap said:

I apologise if I missed this, but what is the reason for wanting out of the car agreement after only 4 months?

And also seemingly knowing it would be paid off in 4 months as it was asked before the purchase

Grumpy_chap

jimjames said:

Grumpy_chap said:

I apologise if I missed this, but what is the reason for wanting out of the car agreement after only 4 months?

And also seemingly knowing it would be paid off in 4 months as it was asked before the purchase

Thanks @jimjames but I am not sure I read the OP's comments about early settlement as indicating advance plan to pay off at 4 months, but only about the options that would be available through the term.
Obviously, some people choose PCP for the incentives but then clear the finance early, but the OP says they are looking to sell the vehicle.
Selling a new car after 4 months is never going to be cheap.  Unfortunately the OP has not said why they wish to sell the car so quickly.

axil23

Grumpy_chap said:

In what way do you think you were mis-sold?

I apologise if I missed this, but what is the reason for wanting out of the car agreement after only 4 months?

When I got the contract I replied back to the broker asking him to confirm what the early termination policy was. 

To which he called up and told me that there were no early repayment fees and I would just pay as per the standard pcp which is a set amount on interest which I forget off hand but its around 58 days? 

I asked him to reply to my email with that in writing which he didn't. 

I sent him a chaser email stating "the paperwork is all done just waiting for your reply with the early termination policy" to which he didn't reply again but called me up to tell me the same as before and that he would reply to email as he was out of office. 

I know its hear say but I was hoping my two emails to him stating the paperwork was received and it didn't contain any early termination policy plus then another email asking to confirm what that was and no reply on his part would show that he didn't answer my questions on the loan. 

In regards to the sale of the car is due to the Insurance going up 6 fold. I had heard of insurance rates on this car being silly so before I bought it I asked my Insurance company who I had been with for years and have a excellent record with. Obviously they couldn't state what the insurance was for the next year but this year it was hardly any extra for the remaining 3 months. Then the renewal came through at 6 times what it was before. 

WellKnownSid

axil23 said:

In regards to the sale of the car is due to the Insurance going up 6 fold. I had heard of insurance rates on this car being silly so before I bought it I asked my Insurance company who I had been with for years and have a excellent record with. Obviously they couldn't state what the insurance was for the next year but this year it was hardly any extra for the remaining 3 months. Then the renewal came through at 6 times what it was before. 

This sounds like you were using your existing personal motor insurance to insure a car belonging to your ltd company - surely it's down to the company to arrange the motor insurance from day 1?