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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.

[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...

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

2.Or that your record will be unaffected in anyway?

3.Or that everyone would not be doing this?

1.http://www.legislation.gov.uk/ukpga/1974/39/section/100

2. Last car I VTd is on my credit report as settled, no defaults or any other markers. Have had 5 car agreements running since... all settled except current one.

3. Presumably people don't read the terms and conditions

[05omegav6]

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.

Hence asking the question here... given the eclectic mix of raggamuffins here, someone might have had experience of this

The principle of VT is sound and proven, I have first hand experience of it. The question is essentially one of  timing...

[Sir Tigger KC]

I'll be watching this thread with interest then, because if it's true that you can buy a nice car on finance and then wriggle out of your agreement after a few months without consequence then that's me down the nearest Daewoo dealers! 

[The Sheriff]

I'll be watching this thread with interest then, because if it's true that you can buy a nice car on finance and then wriggle out of your agreement after a few months without consequence then that's me down the nearest Daewoo dealers! 

You want the daewoo? You can't handle the daewoo! 

[Kevin Wood]

I'll be watching this thread with interest then, because if it's true that you can buy a nice car on finance and then wriggle out of your agreement after a few months without consequence then that's me down the nearest Daewoo dealers! 

Erm.. Hang on a minute...

[The Sheriff]

I'll be watching this thread with interest then, because if it's true that you can buy a nice car on finance and then wriggle out of your agreement after a few months without consequence then that's me down the nearest Daewoo dealers! 

Erm.. Hang on a minute...

Shut it you.

[Marks DTM Calib]

So much for plain English legislation:

Where a regulated hire-purchase or regulated conditional sale agreement is terminated under section 99 the debtor shall be liable, unless the agreement provides for a smaller payment, or does not provide for any payment, to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination.


So horrific wording

So in summary, your liable (simple bit) unless it states otherwise in your T&Cs

And you have to pay the creditor just over or around one half of the total sum less your payments before termination

There is also no mention of you keeping the goods, its nothing more than a exit clause, so I would see the creditor then getting the asset to sell to make up the difference

And that to me is exactly how you would expect it to be 

[The Sheriff]

So much for plain English legislation:

Where a regulated hire-purchase or regulated conditional sale agreement is terminated under section 99 the debtor shall be liable, unless the agreement provides for a smaller payment, or does not provide for any payment, to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination.


So horrific wording

So in summary, your liable (simple bit) unless it states otherwise in your T&Cs

And you have to pay the creditor just over or around one half of the total sum less your payments before termination

There is also no mention of you keeping the goods, its nothing more than a exit clause, so I would see the creditor then getting the asset to sell to make up the difference

And that to me is exactly how you would expect it to be 

That's it, just how I understood it to be. Shut up now, Al. 

[Field Marshal Dr. Opti]

I'll be watching this thread with interest then, because if it's true that you can buy a nice car on finance and then wriggle out of your agreement after a few months without consequence then that's me down the nearest Daewoo dealers! 

Erm.. Hang on a minute...

He really meant to say......Bentley.....Lamborghini......Aston Martin.

[The Sheriff]

I'll be watching this thread with interest then, because if it's true that you can buy a nice car on finance and then wriggle out of your agreement after a few months without consequence then that's me down the nearest Daewoo dealers! 

Erm.. Hang on a minute...

He really meant to say......Bentley.....Lamborghini......Aston Martin.

Similar.....

[Field Marshal Dr. Opti]

I'll be watching this thread with interest then, because if it's true that you can buy a nice car on finance and then wriggle out of your agreement after a few months without consequence then that's me down the nearest Daewoo dealers! 

Erm.. Hang on a minute...

He really meant to say......Bentley.....Lamborghini......Aston Martin.

Similar.....

To be fair to Daewoo they are no worse than FSO, Wartburg and Polski Fiat.

....and probably superior to the legendary 'Commie built' Moskvitch.

See, I can be nice about your Daewoo.

[The Sheriff]

I'll be watching this thread with interest then, because if it's true that you can buy a nice car on finance and then wriggle out of your agreement after a few months without consequence then that's me down the nearest Daewoo dealers! 

Erm.. Hang on a minute...

He really meant to say......Bentley.....Lamborghini......Aston Martin.

Similar.....

To be fair to Daewoo they are no worse than FSO, Wartburg and Polski Fiat.

You'd know, having driven /owned so many of them 

[05omegav6]

Firstly, no longer having the car (or the agreement is kind) of the point...

If you think that legislation makes no sense...

I can voluntarily terminate the agreement provided I pay the undisclosed termination liability before terminating the agreement. If the finance company sold the car at auctioin tomorrow the sale price is all profit and I still owe them the undisclosed termination figure.

If I voluntarily surrender the car, I am liable for the total agreement value (couldn't tell me what that figure was either ), including interest, less the achieved sale price and any costs.

If I pay half the agreement value (again an undisclosed amount), then they auction the car and I am liable for nothing and they keep the proceeds...

How they expect you to make a decision without giving you any idea of liabilty is beyond my simple brain... I appreciate that they cannot foresee what price the car might achieve at auction, but to claim to be unable to give an indication of the liability total (from which they would deduct the sale proceeds) is evasive at best. It should be liability minus sale proceeds. Yet apparently the liability is A and the sale proceeds are B. B is anyones guess. I get that, perfectly reasonable, but to not know what A is is baffling.

I am tempted to ensure that the car clears 300k in the next two years and then VT and see what they get for it then

[Field Marshal Dr. Opti]

I'll be watching this thread with interest then, because if it's true that you can buy a nice car on finance and then wriggle out of your agreement after a few months without consequence then that's me down the nearest Daewoo dealers! 

Erm.. Hang on a minute...

He really meant to say......Bentley.....Lamborghini......Aston Martin.

Similar.....

To be fair to Daewoo they are no worse than FSO, Wartburg and Polski Fiat.

You'd know, having driven /owned so many of them 

I once aspired to Lada ownership.

[The Sheriff]

I'll be watching this thread with interest then, because if it's true that you can buy a nice car on finance and then wriggle out of your agreement after a few months without consequence then that's me down the nearest Daewoo dealers! 

Erm.. Hang on a minute...

He really meant to say......Bentley.....Lamborghini......Aston Martin.

Similar.....

To be fair to Daewoo they are no worse than FSO, Wartburg and Polski Fiat.

You'd know, having driven /owned so many of them 

I once aspired to Lada ownership.

A lada wrote off my saab and drove away with no damage 

[Marks DTM Calib]

Firstly, no longer having the car (or the agreement is kind) of the point...

If you think that legislation makes no sense...

I can voluntarily terminate the agreement provided I pay the undisclosed termination liability before terminating the agreement. If the finance company sold the car at auctioin tomorrow the sale price is all profit and I still owe them the undisclosed termination figure.

If I voluntarily surrender the car, I am liable for the total agreement value (couldn't tell me what that figure was either ), including interest, less the achieved sale price and any costs.

If I pay half the agreement value (again an undisclosed amount), then they auction the car and I am liable for nothing and they keep the proceeds...

How they expect you to make a decision without giving you any idea of liabilty is beyond my simple brain... I appreciate that they cannot foresee what price the car might achieve at auction, but to claim to be unable to give an indication of the liability total (from which they would deduct the sale proceeds) is evasive at best. It should be liability minus sale proceeds. Yet apparently the liability is A and the sale proceeds are B. B is anyones guess. I get that, perfectly reasonable, but to not know what A is is baffling.

I am tempted to ensure that the car clears 300k in the next two years and then VT and see what they get for it then

Challenge then will be agreeing if the condition after said mileage and time meets the fair wear and tear type clause that tends to be in these agreements 

Finance is always bad news.......always

[The Sheriff]

Doing 300K may not be seen as 'taking reasonable care of'.

Once you get an idea like this into your head, and it seems like a way out of a dilemma, it's pretty hard to let go of it. But I would if I were you, Al. 

[The Sheriff]

I know what we all think of finance companies and, in the main, I agree. But, in their defence, it's not their fault you bought a car that you can't get on with. You chose the car, you signed the finance agreement.

[05omegav6]

Duly noted

Seat went back at 2 years old with 140k miles on it and no quibbling...

They did also offer to extend the agreement at lower repayments, which I politely declined I do have some rights under an HP agreement which I would lose if it became a loan... so not entirely daft

[Sir Tigger KC]

....and probably superior to the legendary 'Commie built' Moskvitch.

My Dad had one of those and it was built like a tank! 

Don't think he had it on finance though...... 

[Taxi_Driver]

Duly noted

Seat went back at 2 years old with 140k miles on it and no quibbling...

They did also offer to extend the agreement at lower repayments, which I politely declined I do have some rights under an HP agreement which I would lose if it became a loan... so not entirely daft

A few years ago (about 10)  I had a merc on PCP for 3 years (32k new) , after 3 years I had to pay them the "guaranteed" value of £21k to keep it....I was paying £500/month for it. After 18 months I phoned and asked if I could give it back....they said I had to pay another 6 months...so I did and then they took it back no problems.....so £500 x 24 = £ 12000 . What are the chances they got £20k for it at auction  I wouldn't have thought so....but they took it back without any backlash to me....But that was PCP 

[05omegav6]

Pcps you essentially pay the depreciation and some interest according to your projected mileage rather than capital, as the leasing firm get their money back from the residual

[blackviper90210]

I took out HP on the Vectra I had. Didn't like it, so rang up the finance company and asked how I could VT.
As long as I had paid 50% or more, they would come and collect the car and they would terminate the agreement and that is exactly what I did.
The car went back, I cancelled the standing order payments and no more was said or done.