Car Finance

carquerylady

I would like to return my car a few months early but the finance company have told me it will adversely affect my credit rating.  Is this the case?

eskbanker

Credit 'ratings' are a fairly nebulous concept and it's the actual factual content of your credit files that matters to future lenders.  Do the terms of the contract allow you to do what you propose, or would you be breaking its terms by missing payments that you're contractually committed to?

Ayr_Rage

How is the car financed ?

Why do you need to end the agreement early?

If there isn't enough equity in the vehicle to pay off the balance of the agreement then they will chase you for the shortfall, so it could well affect your credit rating.

Brie

carquerylady said:

I would like to return my car a few months early but the finance company have told me it will adversely affect my credit rating.  Is this the case?

If it is indeed just a few months early then I think there is very little damage that could be done.  Normally the problem is if you have a car "leased" for say 4 years and you try to return it before 2 years are up you would still owe the company money.  No problem as long as you pay it.  If you return it after 3 years chances are they will owe you something as you would have paid more than the car's current value and so they would like to discourage you from doing this so they don't have to pay out.  So I suspect this is simply a scare tactic to make you change your mind.  

*all based on my understanding of the industry not from personal experience.

Nebulous2

It depends how it is financed and what the contract with them says. 

I've a leased car and phoned recently to ask about returning it 2-3 months early. They are happy for me to do that, as long as I pay 50% of the outstanding payments. I thought that was extremely decent of them..... 

carquerylady

Thank you all.
The car is a pcp/lease agreement which is up in December. Due to a change in our domestic circumstances we do not need two cars. The credit company told us that we can pay 50% of the outstanding payments we are due which is fine and they would notify the credit score company and inferred that it would affect any future credit rating. 

Ayr_Rage

Is it a PCP or a lease ?

The two are completely different products.

Nasqueron

carquerylady said:

Thank you all.
The car is a pcp/lease agreement which is up in December. Due to a change in our domestic circumstances we do not need two cars. The credit company told us that we can pay 50% of the outstanding payments we are due which is fine and they would notify the credit score company and inferred that it would affect any future credit rating. 

A PCP deal can be handed back once 50% of payments are made - 50% of all payments including interest and the balloon. Please confirm if it's lease or PCP

carquerylady

It is a PCP agreement.  

carquerylady

Nasqueron said:

carquerylady said:

Thank you all.
The car is a pcp/lease agreement which is up in December. Due to a change in our domestic circumstances we do not need two cars. The credit company told us that we can pay 50% of the outstanding payments we are due which is fine and they would notify the credit score company and inferred that it would affect any future credit rating. 

A PCP deal can be handed back once 50% of payments are made - 50% of all payments including interest and the balloon. Please confirm if it's lease or PCP

It is a PCP agreement

Nasqueron

carquerylady said:

Nasqueron said:

carquerylady said:

Thank you all.
The car is a pcp/lease agreement which is up in December. Due to a change in our domestic circumstances we do not need two cars. The credit company told us that we can pay 50% of the outstanding payments we are due which is fine and they would notify the credit score company and inferred that it would affect any future credit rating. 

A PCP deal can be handed back once 50% of payments are made - 50% of all payments including interest and the balloon. Please confirm if it's lease or PCP

It is a PCP agreement

In which case yes, after you have paid 50% of the total package - including any applicable interest + balloon, you can legally VT the car. If you have not reached 50% you can pay the balance to that point then VT it.