HP car loan

HunterG

Help!!!
I have taken out HP agreements on my last three cars and have been able to return them at the half way point with no further payments to make. My most recent car was purchased this way and over Christmas I had to spend over £2000 in repairs as the car was getting older and had a couple of big problems. I was 40 months into a 60 month HP contract and arranged to return the car. The car is now sold and I have been given an invoice for £1800 and when I asked (3 times) for a breakdown of the charges it looks like the company were more or less billing me for the full cost of the agreement less the sale price of the car. I queried the interest and was given a £400 rebate.
Today I contacted them with what I felt should be the figures- the opening balance was approx £12k for a car costing £8650 (the interest rate was very high) and I have paid £205 per month. With this in mind I emailed them as follows:

My monthly payments of £204.86 should have comprised a principle repayment of £144.18 and interest of £60.68. I have made 40 instalments, repaying £5676.33 of the principle debt plus the recovered £2500 from the sale of the car, giving a total of £8267.33 plus interest due of £2433.73.

Under consumer rights for an HP purchase I believe that the maximum I would be required to pay is the shortfall of £383.66.

They have replied:

Interest and principle are not repaid at the same rate each month. For example your first payment was £92.13 principle and £112.73 interest. The January 2024 payment was £152.98 principle and £51.88 interest.

The remaining balance is compromised of £1,289.46 principle and £181.83 interest.

Is there anything I can do about this? 

stu12345_2

unless I'm reading this wrongly , but you can simply multiply £204 by 40 and if it is more than £6000 ,then you have indeed paid back more than 50% of total owed and you should not be chased at all

again what was the closing balance owed when you handed the car back?
had you paid back £6000, did your statement show total balance still owed over £6000
but 40 times £204 is more than £6000


it doesn't matter how they explain what is principal or what is interest, as long as you have paid £6000 at least of a £12000 total repayable loan
as long as you have paid 50% or more then you win, it's the finance company problem what they got for auction with your car.
as long as it wasn't full of debts and it had an mot


the argument they are using is for someone that never hit the 50% mark and are chasing them for the remainder after the  auction price of the car has been included and your payments if it was less than 50%

you imo have exercised you vt 50% threshold correctly

HunterG

The opening balance was £12291.60 plus £10 admin fee. Prior to the sale of the car my balance was £4351.06

stu12345_2

what is product type 90. you did state you were doing a voluntary termination to them .based on the fact you had paid at least 50% of the total amount owed.

and they did acknowledge  and agree I assume and stated what terms and conditions are part of a VT before you agreed to doing it


as long as you put it in writing to them.that you were doing a voluntary termination  and you didn't simply phone them up and said come repossess my car, cos I don't want it anymore.

that is two different things.cos based on your original post it looks like their chasing you for doing a repossession and the remainder owed  ,
not a voluntary termination which has different owed amounts rules eg none if 50% reached and car has mot and in reasonable condition.

here's a link with the rules you do

https://carplus.co.uk/magazine/voluntary-termination/

https://www.cinch.co.uk/guides/car-finance/what-is-voluntary-termination-on-car-finance

HunterG

I emailed them on 3rd Feb to say- 

I wish to end my agreement. I plan to return the car to you as per the terms and conditions, could you please advise how I go about this.

 They replied to me saying that they would send information by post, which they did. They sent two different sets of information though, one didnt make much sense, but then the next day the information came through about voluntary termination. It was almost like they had given me information regarding a settlement and then had sent the correct information regarding the HP agreement.

I will need to find the information that they sent and go through it again, but I am certain that it was the generic information about voluntary termination of an HP agreement.

stu12345_2

see the links I posted, you had to state specifically to them  you were doing a voluntary termination and not simply handing the car back.
make sure you did the first  choice and you signed to agree to a voluntary termination

cos if you simply stated you told them you want to end your agreement, they may have thought you are paying off the remainder in a lump sum or simply giving them the car back and letting them chase you for the debt remaining.

it has to be a VT and signed to say it is a VT

HunterG

I have never had this issue before

stu12345_2

there is a difference between a voluntary surrender and a voluntary termination 

https://glensidefinance.co.uk/voluntary-termination-or-voluntary-surrender/

did you ask to do a termination or a surrender 

termination is exercising your legal right based on reaching 50% and the car being in good condition and mot.

surrender is simply abandoning the agreement at any point and walking away and being left with the debt after the car has been sold at auction 

as you had paid more than 50% and if the car had an MOT and was in reasonable condition it would not make sense to do a surrender over a termination.

What's your next move, complain that you wanted a termination and not a surrender 

HunterG

Thank you so much. 
I have made a complaint to their complaint resolution service and will see how they reply. 

They sent out two different options, but neither was for voluntary termination and I didn't know there was a difference.

stu12345_2

you could post your problem on legal beagles forum.

from info I've read you simply had to state you wish to end your agreement, and the finance company would already know that you had reached the 50% mark and  process you with a voluntary termination,  as it was the primary position,not a surrender

as you had reached 50%, had an MOT and was in reasonable condition.

imo the finance company have not followed the  correct and best option for you as the primary  main position for you would be termination, not surrender.



https://www.car.co.uk/car-finance/faqs/cancelling-finance/how-to-get-out-of-a-car-finance-agreement

surrender should be used when you're in arrears with monthly payments and haven't reached the 50% mark.


the provisions of section 90 of the consumer credit act lays down the rules you have concerning your rights regarding ownership of the car and your rights of how you can end your agreement and what steps the creditor is allowed to repossess your car.

I think that is your main ammo for complaint, even if they say you filled in a form for surrender. cos termination would and is the main default primary position for you and your situation and should have been used by the finance company.

getting you to choose surrender is faulty administration on their part 

there was no need for the finance company to follow that route. or tell you that is the one you should use, cos you didn't fit that criteria, you fitted termination instead( which would have been the primary position for you anyway)

if the  complaint response you get saying you ticked the box for a surrender, then I would do another complaint reply stating, my primary position was termination and you didn't apply that when you should have to me.

in simple terms its like getting sold at the booking office of a bus or train station for two single fares, instead of a day return, you said yes, when the clerk says are you coming back today.  I was an ex bus driver and we were not allowed to sell a passenger the most expensive  wrong method, the default position would be a day return for someone returning the same day.

definitely grounds for complaint. you have the financial ombudsman if all else fails to complain too.

cos you now have a default marker on your credit file as well as the outstanding debt shortfall.

it would be good if one of the mods could reply here to your post 

Andyjflet

Slight mistake here, you have to identify you are exercising your rights to VT as this is a different type of end to an agreement, what you have said is, I'm giving the car back.... sell it and bill me for the rest.