Need help with car finance whilst on maternity leave
Hello I don’t know if anyone can help with some advice. Basically I’ve got a hire purchase car with peugeot (PSA Finance) I’m nearly at the end of the 3 year contract (ends in October) I’ve never missed any payments whilst I was working but I’ve recently gone on maternity leave and am in receipt of government maternity allowance (as wasn’t at previous job long enough to get SMP).
I am now struggling to make my £230 a month finance payments, I only get £290 every fortnight and have to pay rent a bills etc with this, I do get some help from tax credits and child benefit but this still isn’t enough to cover my basic bills. I have tried to explain to psa about my situation and that I obviously didn’t foresee this happening when I first took the contract out etc but they don’t seem to offer any help or guidance and even asked if I could afford to pay them more?
They have a policy that if you become unemployed and in receipt of benefits they’ll give you a 6 month waiver but apparently maternity benefit isn’t the same as this.
The contract ends in October, I have until January off work anyway so it’s not like they can wait for me to go back to work any time soon hoping I’ll be able to afford the payments again as that is not be happening. (also I won’t actualky be returning as I’m going back to uni full time so will be a student)
Has anyone been in this situation and found a way to reduce payments or anything? Any help would be appreciated
I am now struggling to make my £230 a month finance payments, I only get £290 every fortnight and have to pay rent a bills etc with this, I do get some help from tax credits and child benefit but this still isn’t enough to cover my basic bills. I have tried to explain to psa about my situation and that I obviously didn’t foresee this happening when I first took the contract out etc but they don’t seem to offer any help or guidance and even asked if I could afford to pay them more?
They have a policy that if you become unemployed and in receipt of benefits they’ll give you a 6 month waiver but apparently maternity benefit isn’t the same as this.
The contract ends in October, I have until January off work anyway so it’s not like they can wait for me to go back to work any time soon hoping I’ll be able to afford the payments again as that is not be happening. (also I won’t actualky be returning as I’m going back to uni full time so will be a student)
Has anyone been in this situation and found a way to reduce payments or anything? Any help would be appreciated
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Comments
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Do you want to keep the car till October?
If not it sounds like you may be in a position to voluntarily terminate the agreement and just hand the car back now. To do this you will have to have paid 50% of the total amount payable.0 -
No I have said before I!!!8217;m quite happy to hand the car back now but when I!!!8217;ve previously said that they didn!!!8217;t really make it sound like an option over the phone. But I don!!!8217;t know what more I could do, they can clearly see I!!!8217;ve tried to keep up with the payments and paid whenever I could but I can!!!8217;t keep it up and instead of building bad credit and them taking further action as I just can!!!8217;t make the payments anymore in full on time I thought they!!!8217;d work something out with me between now and October0
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You have a few options, but it would depend on the exact nature of your car finance.
If it is a Hire Purchase (often called HP), this is essentially a secured personal loan on the car. You put down a payment upfront and pay a monthly sum over an agreed term and at the end you own the car outright.
Under this agreement you could look at settling the loan early, reducing the payment by paying a lump sum, or look at the value of the car using trade sites (WeBuyAnyCar, or perhaps sites like Tootle) to sell the car and settle the finance.
If it's a Personal Contract Plan (referred to as PCP), then you have all the same options as with the HP above. Just note that as you offset a large portion of the loan to the end, it's likely you will owe more than the car is worth. In this case, you could look at Voluntary Termination if you have repaid 50% of the total amount (this is the total cost of the car, plus any interest and fees).
The final one is a lease hire agreement. This is where you just pay an initial payment, then a set monthly payment over an agreed term. At the end, you hand the car back and that's the end of it. There is generally no option of ownership.
In the case of a lease, terminating the contract early can be tricky. It's very dependent on the company, but some can ask for all remaining payments before the contract is ended. You will need to discuss this with them.
Hope that helps. My guess is that it is the first type of finance, a HP. In which case I would look at the value of the car and see what you can get for it, then look at what the settlement figure is. Then you can use any money left over towards a cheaper car.0 -
It is an option. Check your agreement to see what it says about early termination. If you need help then post full details of the finance agreement - purchase price, deposit amount of finance etc0
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DrEskimo thank you this was helpful, it is a pcp I remember correctly now you!!!8217;ve mentioned it. I remember when I got the car out they said at the end I would have 3 options either hand the car back and that be the end of it, hand it back and get another one (which I won!!!8217;t get credit for now I!!!8217;m on maternity leave) or keep the car by paying the remaining 5k off (which I don!!!8217;t have).
I can obviously hand it back in October but I just can!!!8217;t pay for it before then so wondering if they would let me voluntary hand it back before that time.
I had thought of selling it and getting the buyer to make the payment to psa as I had been told I could do this but it isn!!!8217;t worth as much as the settlement figure now as I have previously had a quote from available car so I!!!8217;d still be left with a bill I can!!!8217;t afford !!!55357;!!!56398;!!!55356;!!!57340;0 -
As said above it's not a case of them letting you. If you have paid 50% then you have a legal right to give it back now.0
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DrEskimo thank you this was helpful, it is a pcp I remember correctly now you!!!8217;ve mentioned it. I remember when I got the car out they said at the end I would have 3 options either hand the car back and that be the end of it, hand it back and get another one (which I won!!!8217;t get credit for now I!!!8217;m on maternity leave) or keep the car by paying the remaining 5k off (which I don!!!8217;t have).
I can obviously hand it back in October but I just can!!!8217;t pay for it before then so wondering if they would let me voluntary hand it back before that time.
I had thought of selling it and getting the buyer to make the payment to psa as I had been told I could do this but it isn!!!8217;t worth as much as the settlement figure now as I have previously had a quote from available car so I!!!8217;d still be left with a bill I can!!!8217;t afford !!!55357;!!!56398;!!!55356;!!!57340;
OK so you want to ensure you get a fair price for the car. Selling privately is tricky, particularly if it's got finance attached, but it is possible. I found that I got a good price using a site called Tootle. You put the car details in, and a range of dealers will come back with offers.
Get the exact settlement for the car, and look on AutoTrader and use your quote from WeBuyAnyCar to get a good idea of what it's worth.
If it's looking like the car has just depreciated much more than the finance company predicted (not uncommon for diesel cars at the moment...) then as BoGoF has stated, you can look at voluntary termination. Seeing as you are about 32months into a 36month contract (?), typically you should be near the 50% of the total payable mark. Ring the company and ask for the figure and ask to do this if this is the best option.
It will depend on the exact terms of your deal though (discount, deposit, APR, length, final payment, etc).
Are you within the agreed mileage, and is the car in good condition?0 -
Hi LMS93
I would just add if you decide to sell the car, make sure you have written permission from the creditor to do so, as it's not actually yours to sell yet.
You don't need to ask them for permission to terminate the agreement, that is your right as long as the agreement is regulated by the Consumer Credit Act (it almost certainly is but you can check your agreement).
If you terminate you'll be held liable for 50% of the original agreement minus the payments you have already made. They can also hold you liable for any damage (beyond normal wear and tear) and any extra costs specified in the PCP terms & conditions, for example if you have gone over the mileage limit.
You can find more on HP agreements (which PCP is a type of) here https://www.nationaldebtline.org/EW/factsheets/Pages/hire-purchase-debt/hire-purchase-and-conditional-sale.aspx, including a link to a sample letter to terminate the agreement.
Best wishes
Susie
@natdebtlineWe work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps0
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