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[05omegav6]

Under a standard HP agreement and as detailed in Section 100 of the Consumer Credit Act 1974/2006, you can return goods once you have paid at least half of the agreement total and have taken reasonable care of the goods with no further liability.

In example...

Purchase price £10,000
Deposit £1,000
Finance £9,000
Payments 36 x £300
Total payable £10800

The 50% minimum would be (£10800/2) £5,400.

That is all fine, have done this previously on this basis, so understand how it works. But...

It has been suggested that you can Voluntarily Terminate at ANY point and only be held liable for the first 50% of the agreement value.

So using the example above, say 4 payments made of £300, given a paid to date total of £1,200. Car gets returned to finance company and sold at auction. Provided the car sells for £4,200 (£5,400-£1,200) or more, there's no further liability.

Is this correct?

[Gaffers]

I thought it was a third, not half

[The Sheriff]

Under a standard HP agreement and as detailed in Section 100 of the Consumer Credit Act 1974/2006, you can return goods once you have paid at least half of the agreement total and have taken reasonable care of the goods with no further liability.

In example...

Purchase price £10,000
Deposit £1,000
Finance £9,000
Payments 36 x £300
Total payable £10800

The 50% minimum would be (£10800/2) £5,400.

That is all fine, have done this previously on this basis, so understand how it works. But...

It has been suggested that you can Voluntarily Terminate at ANY point and only be held liable for the first 50% of the agreement value.

So using the example above, say 4 payments made of £300, given a paid to date total of £1,200. Car gets returned to finance company and sold at auction. Provided the car sells for £4,200 (£5,400-£1,200) or more, there's no further liability.

Is this correct?

No, that's not correct. The finance company would be losing out to the tune of £4600...£10000 minus the £5400 they had recouped. The whole idea of the goods being returned in a reasonable condition after half of the debt has been repaid is that they can recover the other half by resale.
Also, if the credit agreement is not settled to the lenders satisfaction, they will put a marker on your credit file.

[The Sheriff]

When I saw 'voluntary termination' I thought Gixer was gonna actually do it. Bah.

[zirk]

When I saw 'voluntary termination' I thought Gixer was gonna actually do it. Bah.

So did I as it happens 

[05omegav6]

I thought it was a third, not half

Thirds apply to repossession... Cannot be repossessed without a court order once you have paid at least a third

[05omegav6]

Right, voluntary termination is not allowed to mark your credit file, but the lender in question might 'choose' not to lend to you anytime soon...

Last car agreement I VTd had £8,375 left, and a retail value of £2,500 at most... in that case, the finance company received 64% of the agreement value in total...

Using my earlier example, 64% of the agreement value would be £6,921, so as long as the car achieves 50%, anything over and above is gravy for the finance company... so not sure that Stmos take on the maths holds water

[Marks DTM Calib]

Not sure yours does, I agree with STMO, your first set of calcs leaves the finance company out of pocket big time.....good luck with that one

[Sir Tigger KC]

You can voluntary terminate at any time by requesting a 'settlement figure' calculated by the 'Rule of 78ths' which basically deducts the amount of outstanding interest from the total amount payable and in theory you pay back the remaining capital amount plus 'admin charges'. 

[The Sheriff]

Right, voluntary termination is not allowed to mark your credit file, but the lender in question might 'choose' not to lend to you anytime soon...

Last car agreement I VTd had £8,375 left, and a retail value of £2,500 at most... in that case, the finance company received 64% of the agreement value in total...

Using my earlier example, 64% of the agreement value would be £6,921, so as long as the car achieves 50%, anything over and above is gravy for the finance company... so not sure that Stmos take on the maths holds water

My figures are ok, it's only adding and taking away, even I can do that. I'm not sure if its come across the way you wanted it to, or if I've misunderstood what you're trying to say.

[05omegav6]

Your maths is fine , it was the wrong word...

I saw mention of the fact that it was possible to VT at any point (provided the finance company receive at least half of the agreement) on a money advice website.

You can voluntary terminate at any time by requesting a 'settlement figure' calculated by the 'Rule of 78ths' which basically deducts the amount of outstanding interest from the total amount payable and in theory you pay back the remaining capital amount plus 'admin charges'. 

That's not VT, merely early settlement... I would keep the car in this case.

The aim is to dispose of both the car (in negative equity) and the agreement. If the car achieves £14.5-15k at auction, then they would be no worse off than if I VTd in 2 years/180k miles time...

[Marks DTM Calib]

Thats where I suspect you are missing the point.....the worse of bit.

The finance company will not walk away with a loss.....unless you default and take the consequences associated.

If the calcs mean the finance company are fully reimbursed plus something for their trouble then its a different matter.

[05omegav6]

Surely they lose out regardless whether the car goes back now or in two years time

They aren't obliged to like or be happy about it, but they are legally bound by Section 100...

[Marks DTM Calib]

Surely they lose out regardless whether the car goes back now or in two years time

They aren't obliged to like or be happy about it, but they are legally bound by Section 100...

If they lose out in anyway......do you think they will go quietly?

Or that your record will be unaffected in anyway?

Or that everyone would not be doing this?

[Field Marshal Dr. Opti]

Taxi Al......I would look more deeply into this. You may be correct but I very much doubt it.

As already stated, finance companies are not noted for their benevolence.