Balloon payment taken after finance ended and I no longer own the car!

Bridge1986

My car finance was coming to the end of it's term in March 2025 so I part ex'd my old car for a brand new model(same garage I bought the original one from). I was assured on several occasions by the sales rep and finance team that the balloon payment(of the old car) was taken care of as I no longer owned the car(received documentation from DVLA) and my sales rep told me it was "physically impossible" as they had sold my old car to someone else. I had chase this up both with the finance company and my sales rep.

A month into owning my new car, to my shock the balloon payment was taken out of my account and I was put into an unarranged overdraft. After contacting the sales rep/sales manager of the garage, the finance company and the bank to correct this, nobody could tell me why this had happened and when it was going to be sorted. It took 3 days for the money to return to my account. No goodwill gesture/explanation as to why this happened. Not even an apology from the sales rep/manager or even a follow up phone call to confirm the money had gone in.

I am now looking into making a formal complaint to said finance company and also the sales garage which I dealt with.

I am wondering if it is also worth going to the FCA with this as I am very worried it may have affected my credit file and also if they were legally allowed to do this.

Any advice would be of great help!

paul_c123

How did they take the payment? If it was Direct Debit, I don't know why the bank didn't reverse it within a day, presuming you contacted them?

onomatopoeia99

Your bank should have reversed the direct debit immediately when you exercised your rights under the direct debit guarantee scheme and required them to investigate the incorrectly taken DD - did they not do this?

mills705

Sounds like he didn't ring his bank but the garage instead. 
If you left the part ex or whatever til quite late it might be the finance wasn't satisfied on the old vehicle so they were all set up to still take it? 

born_again

onomatopoeia99 said:

Your bank should have reversed the direct debit immediately when you exercised your rights under the direct debit guarantee scheme and required them to investigate the incorrectly taken DD - did they not do this?

Bank does not investigate. All they do is claim the money back. Which the finance co can reject. As the balloon was part of the schedule of payments. They could easily reject the claim.

Seems the issue here is a mess up between garage & finance co.
Which could simply be a matter of timing between garage telling finance co & the payment already being in the system.

born_again

Bridge1986 said:

I am wondering if it is also worth going to the FCA with this as I am very worried it may have affected my credit file and also if they were legally allowed to do this.

Any advice would be of great help!

You can not go to FOS (not FCA) who deal with complaints until you have been through the finance co's complaint process. Garage has nothing to do with FOS/FCA.

What have you financially lost here?

DullGreyGuy

Bridge1986 said:

My car finance was coming to the end of it's term in March 2025 so I part ex'd my old car for a brand new model(same garage I bought the original one from). I was assured on several occasions by the sales rep and finance team that the balloon payment(of the old car) was taken care of as I no longer owned the car(received documentation from DVLA) and my sales rep told me it was "physically impossible" as they had sold my old car to someone else. I had chase this up both with the finance company and my sales rep.

A month into owning my new car, to my shock the balloon payment was taken out of my account and I was put into an unarranged overdraft. After contacting the sales rep/sales manager of the garage, the finance company and the bank to correct this, nobody could tell me why this had happened and when it was going to be sorted. It took 3 days for the money to return to my account. No goodwill gesture/explanation as to why this happened. Not even an apology from the sales rep/manager or even a follow up phone call to confirm the money had gone in.

I am now looking into making a formal complaint to said finance company and also the sales garage which I dealt with.

I am wondering if it is also worth going to the FCA with this as I am very worried it may have affected my credit file and also if they were legally allowed to do this.

Any advice would be of great help!

So either the garage has been too slow in paying off the money to the finance company or they didnt send the correct remittence advice for the finance company to allocate the monies to your debt or the finance company made an error will allocating the cash. 

What date was the payment taken? Remember a DD request normally starts a week before the monies are actually drawn so if the payment was received a day too late then the DD process cannot be stopped. 

Things like "physically impossible" are just rubbish, the finance system will just continue along the normal path which is to debit the balloon unless the vehicle has been surrendered to the finance company or the debt has been paid off. 

The only thing consumers can report to the FCA is a company operating without authorisation (ie a fake insurer or bank). For anything else the Financial Ombudsman is the point of complaint but that is only after raising the complaint with the company and either they have issued you a final response letter/email or 8 weeks have passed, which ever is sooner.

Car_54

"I no longer own the car!"

OP, you have never owned the car.

Hoenir

Direct debits are set up well in advance. May well just be one of those crossover events. Personally I always cancel direct debit mandates at the bank when terminating financial arrangements.