Sole trader offering finance?

My son is a sole trader doing bespoke welding and fabrication - mainly for drift cars and rally cars - roll-cages and exhausts etc. He has been asked again and again by customers if they can pay a deposit and then pay for the work in installments.

Problem: is this a credit agreement regulated by the consumer credit act?

We are very confused after trying to read about it.

Basically, he wants them to pay a third up front as a deposit with the car as security. If they don't pay they can't collect their car - if they completely fail to pay after written notice of outstanding payment then he has the right to sell the car to recoup his costs.

Is this doable?

One of the issues that he has in his line of work is that it is often young lads who have these types of drifting cars who have big ideas and small wages. He does the work, spends a lot of time and resources on the job and has (in the past) been lumbered with cars sitting in his yard not paid for and not collected.

Meanwhile, he is trying to grow his business and manage this risk by using the cars themselves as security if the customer fails to pay.

Any advice appreciated

Comments

  • System
    System Posts: 178,077
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    DO NOT DO IT. And yes it is covered by CCA and he needs to have a license to offer it as a business.

    But as I said don't do it. If they want to pay a deposit and pay in installments then they can go to the bank and get a loan. If the bank who has teams of experts on risk decides they're too much of a risk then do you think it reasonable for your son to be extending credit to them? They are asking because they can't afford the work and as you say many of his customers are young lads with big dreams and no money.

    The problem with using the cars as collateral is they're modified. That means they're a lot harder to sell because you're going to have to find a buyer who is interested in buying a half complete car which may not even run, may not have an engine and who wants the modifications which have already been done to the car so you have an extremely limited market. Usually they're old crappers as well so the chances of him recouping the value of work lost is very low.

    He doesn't want the hassle of it, it'll end up consuming so much space it impacts his ability to be able to work and it'll start to take up so much of his time it'll become the main focus of his work.
  • Clive_Woody
    Clive_Woody Posts: 5,852
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    Forumite
    Let them pay in installments and when the final payment is made he starts the work.
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
  • Herzlos
    Herzlos Posts: 14,662
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    Forumite
    Let them pay in installments and when the final payment is made he starts the work.

    Exactly. Or do the work in installments where possible.

    If he takes the car as collateral, and the buyer doesn't pay, he's going to get no end of hassle about it and likely stuck with a modified car that's not worth much.

    These folk manage to (presumably) pay for the car, insurance, transporting it to tracks, and all the modifications. It shouldn't kill them to finance custom welding/fabrication for a track car.

    OR, he could always look at finding a finance partner, and skim a bit of commission from the finance package whilst offloading the risk and hassle to a 3rd party that knows the market.
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