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  • FIRST POST
    Flying Quill
    Regulated and non-regulated
    • #1
    • 23rd Jun 09, 2:07 PM
    Regulated and non-regulated 23rd Jun 09 at 2:07 PM
    Could someone tell me what the difference is between regulated and non-regulated loans, please?

    I have a 4 year car finance plan (hire agreement) which is half way through, but I've paid off less than a quarter of the loan - just half of all my payments have been used to reduce the loan, the other half is interest!

    The loan is for approx £45000, I pay approx £800 per month, which is £19000 since the loan began. After 2 years I currently owe £35000.

    So, I'm looking in to my agreement to work out what I've signed up for. A bit late, I know. Hidden in the agreement (because it's not clearly labelled) is what I think is the total cost of credit - £14500 - provided a constant FHBR.

    I need to sell the car (due to expanding family) and I'm trying to work out what the APR is on this loan, and whether I can just give the car back and terminate the agreement. I've scoured the net for information, but can't get the answers.

    Can any financial gurus pass on some opinions?

    Many thanks
    FQ
Page 1
    • CLAPTON
    • By CLAPTON 23rd Jun 09, 2:24 PM
    • 41,651 Posts
    • 30,691 Thanks
    CLAPTON
    • #2
    • 23rd Jun 09, 2:24 PM
    • #2
    • 23rd Jun 09, 2:24 PM
    How much did you actually borrow? (i.e. before interest)
  • standupguy
    • #3
    • 23rd Jun 09, 2:27 PM
    • #3
    • 23rd Jun 09, 2:27 PM
    In view of the amount of advance your agreement is unregulated which means it is not covered by the Consumer Credit Act and you have therefore no rights to teminate the agreement and hand the car back.
  • Flying Quill
    • #4
    • 23rd Jun 09, 2:47 PM
    • #4
    • 23rd Jun 09, 2:47 PM
    The loan was for £45000 with a balloon of £20000 and at £800 per month. After 2 years I've paid £19000, but the outstanding balance is still £35000.

    This is from a financial services company associated with a major car manufacturer.

    Thanks
  • ILW
    • #5
    • 23rd Jun 09, 2:51 PM
    • #5
    • 23rd Jun 09, 2:51 PM
    Bllody hell. For £800 per months I would expect to be buying a house.
    • CLAPTON
    • By CLAPTON 23rd Jun 09, 2:54 PM
    • 41,651 Posts
    • 30,691 Thanks
    CLAPTON
    • #6
    • 23rd Jun 09, 2:54 PM
    • #6
    • 23rd Jun 09, 2:54 PM
    I am confused
    48 payment of 800 is only £38,400 even without any interest
  • Flying Quill
    • #7
    • 23rd Jun 09, 7:48 PM
    • #7
    • 23rd Jun 09, 7:48 PM
    Amount borrowed = £45000
    Monthly payments = £800 x 48
    Balloon = £21000 (or return car)

    Amount paid so far = £19000
    Balance = £35000

    Interest is 4% above FHBR with a 3.5% collar on the FHBR

    Interest payable I think is around £14000 after 4 years.

    Thanks for your help.
    FQ
  • insideinfo
    • #8
    • 23rd Jun 09, 10:19 PM
    • #8
    • 23rd Jun 09, 10:19 PM
    Hi, I agree with stanupguy

    The agreement is unregulated ...
    CCA 1974, 2006 (Amended).

    Section 8 of the Act. CCA 1974 (b) subsection (2)

    The previous financial limit of £25,000 was removed by the 2006 Act with effect from 6 April 2008.

    2 Removal of financial limits etc.

    (1) In section 8 of the 1974 Act (which defines consumer credit agreements)—
    (a) in subsection (1) for “personal” substitute “consumer”;
    (b) subsection (2) shall cease to have effect.
    The Act: http://www.opsi.gov.uk/acts/acts2006/ukpga_20060014_en_1
    This agreement is unregulated and you have no early termination rights. Therefore if you send the car back they will sell it or aution it and you may be liable for the shortfall which will be an unsecured debt. The detail is within he original agreement. Post 6th April 2008 agreements are regulated over £25k.
    Negotiate with the lender (do not disclose assetts or property) ask if you can sell the car and come to an agreement on the balance, they may refuse as they have "legal title" to the car. Good luck.
  • Flying Quill
    • #9
    • 23rd Jun 09, 11:34 PM
    • #9
    • 23rd Jun 09, 11:34 PM
    I've obviously been very stupid in signing up to this agreement, and I realise that it now seems to be a very punitive contract. I'm angry that a reputable dealer has saddled me with such a contract and I just want to sell the car. Unfortunately the car is in negative equity and I face stumping up lots of money to simply hand the car back.

    The finance company is regulated by the FSA, however the loan is stated as unregulated. The amount of interest seems excessive and non of this is clear form the agreement. Surely, if a company is regulated by the FSA, they cannot simply offer loans which are outrageous and unreasonable simply by stating "non-regulated"?
    • iolanthe07
    • By iolanthe07 24th Jun 09, 8:57 AM
    • 5,134 Posts
    • 4,833 Thanks
    iolanthe07
    When borrowing these sort of sums of money on a depreciating asset like a car, it might well be worth getting your accountant to have a look at the credit agreement before signing it. (S)he will know what to look out for.
  • ILW
    such a contract and I just want to sell the car. Unfortunately the car is in negative equity and I face stumping up lots of money to simply hand the car back.
    Originally posted by Flying Quill
    This thing about the car being in negative equity seems to come up quite a lot.
    Do not people realise that a new car is a fast depreciating asset and unless a large deposit is paid, will be in negative equity as soon as it id driven off the forecourt.
    The bit that surprises me is that someone who is obviously doing pretty well to be able to afford £800 per month signs up to something they do not seem to understand.
  • ljcb123
    Hi I am in the same position, we have a balloon payment of £21,035.00 to find, although the salesman told us when we bought the car that we could either pay it or hand the car back; now we can do neither. There is no mention of the interest rate on the agreement.
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