VT Issues with car

System

This discussion was created from comments split from: Credit Reference Agencies may hold your data for up to 10 years!.

tango_whiskey

Thank you for sharing all this information, which I found most interesting. I have a related issue that I’d welcome any advice on.

In 2015 I returned my car to BMW under the Voluntary Termination (VT) arrangement and all seemed to be pretty straightforward – the car was accepted by as being in good condition and so I assumed that would be the end of matters. However, I ten received a message from BMW saying that I owed them money because of the ‘excess mileage’ on the car. I checked this on the Legal Beagles forum where many sources replied to say that this was not allowed because of the limitations set out by the Consumer Credit Act, which states that under the termination of hire-purchase etc., agreements,

“Where a regulated hire-purchase or regulated conditional sale agreement is terminated under section 99 the debtor shall be liable, unless the agreement provides for a smaller payment, or does not provide for any payment, to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination.” (Part VII, section 100)

The borrower’s liability is therefore limited under a VT arrangement by the Act to half the total price, which I had paid in full and BMW accepted the VT. However, the Act further clarifies (in section 189) that the “total price” means the total sum payable by the debtor under a hire-purchase agreement or a conditional sale agreement, including any sum payable on the exercise of an option to purchase, but excluding any sum payable as a penalty or as compensation or damages for a breach of the agreement.

Many contributors to online advice about VT’s conclude that ‘excess mileage’ is clearly a form of  ‘penalty’, ‘compensation’ or ‘damages’ for a breach of the agreement but BMW Finance did not accept this and despite my several communications with them they posted a default on my credit report and refused to remove it.

I had assumed that this would therefore expire at the 6-year mark and lodged a dispute with the credit scoring companies but Experian have continued to show the account on my report, so I wrote to them recently to enquire about this. They replied to say that BMW responded to their query to say "We are reporting correctly. The outstanding balance is in relation to excess mileage charges that we are obligated to report until the balance is paid in full. As this is a settlement shortfall, it does not expire after six years."

This appears to me to contradict what the Consumer Credit Act specifies. Does this mean that my credit score will continue to be affected indefinitely by the BMW entry.

sourcrates

I have moved your post to a new thread so you will get more responses.

The one you tagged onto was over 2 years old.

molerat

Legal Beagles really get themselves tied up in a knot on this one. Excess mileage is considered to be reducing the value of the vehicle by damaging it beyond what you contractually agreed to, the same as a dent or scratch reduces the value, and is generally agreed as this by the FOS so is an acceptable post VT charge. The plus point though is it would unlikely go to court as it would open up the possibility of it going to a higher court for a definitive answer which may or may not fall in the lender's favour, the status quo of those that do and don't pay up is balanced enough in favour of the lender. Has the account actually defaulted ? A default should be removed from your file after 6 years from the date it was applied, a default should have been applied 3 months after you failed to pay.  You need to raise a formal complaint with BMW finance and take it to the ICO if not rectified.