Early Termination Car Finance

[bullrunner]

Currently im trying to exercse a volountary termination on a HP agreement with BMW.Term was for 5 years with a GFV of £ 17k. To date ive paid over three years payments and have paid over 50% of the value of the agreement. Finance company have advised that a 'Volountary Termination' is not applicable to a HP product and that they would only take the car back and sell it expecting me to make up any difference in the shortfall....Can anyone advise of the Volountary Termination rights of a HP or any other finance agreement please as I feel they are taking the p**s

[rsv gone!]

You are talking about a balloon arrangement, aren't you? These are different from HP agreements (and were dreamed up to stop people handing back their cars IIRC).

[Mx_Stu]

I had a HP agreement with VW finance, which I terminated as soon as I made 50% of the payments.

Are you certain it is a HP agreement and not a PCP agreement?

[a_bloke]

bullrunner said:

Currently im trying to exercse a volountary termination on a HP agreement with BMW.Term was for 5 years with a GFV of £ 17k. To date ive paid over three years payments and have paid over 50% of the value of the agreement. Finance company have advised that a 'Volountary Termination' is not applicable to a HP product and that they would only take the car back and sell it expecting me to make up any difference in the shortfall....Can anyone advise of the Volountary Termination rights of a HP or any other finance agreement please as I feel they are taking the p**s

With the GFV being £17K, i'm assuming that the total contract cost exceeded £25K?

If so thats your problem - finance agreements above £25K are not regulated and they dont have the 50% voluntary termination clause.

Sorry..

[P-Jay]

Not only that, but VT can only be done after you have made 50% of payments, INCLUDING the balloon, you 50% point will be very near the end of the agreement.

[a_bloke]

P-Jay said:

Not only that, but VT can only be done after you have made 50% of payments, INCLUDING the balloon, you 50% point will be very near the end of the agreement.

Yes, its 50% of the total loan agreement. On a 48 month PCP deal with a lowish deposit it tends not to be an option until about month 42, but in this case it wont matter, as the total loan is over £25K

[a_bloke]

rsv gone! said:

You are talking about a balloon arrangement, aren't you? These are different from HP agreements (and were dreamed up to stop people handing back their cars IIRC).

You can still hand a car back under that 50% clause on a PCP deal, but you only have those rights if the loan does not exceed £25K, whether it be pure HP or via a PCP deal.

[P-Jay]

The £25k limit for regulated stuff died a year or so back, maybe more. I don't *think* it applies retrospectively though.

Balloon is a non-specific term used by finance companies in regards to any final payment.

A HP, is a HP (or LP - There's no meaningful difference) whether or not it has a final payment.

PCP differs as the "balloon" is actually an RV and doesn't make up part of the 'normal' payments. A PCP is actually a long-term rental agreement whereby you can buy the Car at the end at an amount agreed at the start. So the VT point would be half way through the agreement.

Here's a fun fact when it comes to VT's. They show on credit reports. It's up to any new lender to decide what they do with that information.

Edited by P-Jay on Tuesday 1st September 17:08

[a_bloke]

P-Jay said:

The £25k limit for regulated stuff died a year or so back, maybe more. I don't *think* it applies retrospectively though.

Balloon is a non-specific term used by finance companies in regards to any final payment.

A HP, is a HP (or LP - There's no meaningful difference) whether or not it has a final payment.

PCP differs as the "balloon" is actually an RV and doesn't make up part of the 'normal' payments. A PCP is actually a long-term rental agreement whereby you can buy the Car at the end at an amount agreed at the start. So the VT point would be half way through the agreement.

Here's a fun fact when it comes to VT's. They show on credit reports. It's up to any new lender to decide what they do with that information.

Edited by P-Jay on Tuesday 1st September 17:08

No, its once you've paid 50% of the total transaction cost, not half way through the payments. I've checked that out and its clear on the agreement.

[mcflurry]

P-Jay said:

Here's a fun fact when it comes to VT's. They show on credit reports. It's up to any new lender to decide what they do with that information.

And in my experience the same lender was perfectly happy to lend me another PCP on another car after a VT

[a_bloke]

mcflurry said:

P-Jay said:

Here's a fun fact when it comes to VT's. They show on credit reports. It's up to any new lender to decide what they do with that information.

And in my experience the same lender was perfectly happy to lend me another PCP on another car after a VT

+1

When we did a VT a couple of years ago, we got a thank you letter from the finance company and a note to say if we were buying another car on finance to contact them for their best deal!

[Mx_Stu]

a_bloke said:

mcflurry said:

P-Jay said:

Here's a fun fact when it comes to VT's. They show on credit reports. It's up to any new lender to decide what they do with that information.

And in my experience the same lender was perfectly happy to lend me another PCP on another car after a VT

+1

When we did a VT a couple of years ago, we got a thank you letter from the finance company and a note to say if we were buying another car on finance to contact them for their best deal!

+2

VT'd with VW finance then bought a car from Honda who had no problems and advised that the same clause was in the agreement should I want to do the same once 50% had been paid.

On my credit report it simply shows that all the payments were made on time then advsises agreement terminated early. I imagine the same thing would happen if you re-mortgaged or moved property. My experian report shows that my credit score is something like 345/350 (excellent) so it really hasn't caused any problems.

[Defcon5]

Mx_Stu said:

On my credit report it simply shows that all the payments were made on time then advsises agreement terminated early.

Thats what it would say if you settled the amount outstanding by paying it off/insurance payout isnt it?

[Mx_Stu]

Defcon5 said:

Mx_Stu said:

On my credit report it simply shows that all the payments were made on time then advsises agreement terminated early.

Thats what it would say if you settled the amount outstanding by paying it off/insurance payout isnt it?

Would assume so.

[tays27]

What happens if you have set the mileage at say 8k a year and hand it back at the halfway point with a mega mileage? I presume you have to pay the excess mileage charges on top?

[a_bloke]

tays27 said:

What happens if you have set the mileage at say 8k a year and hand it back at the halfway point with a mega mileage? I presume you have to pay the excess mileage charges on top?

This seems to be a bit of a grey area - i dont think they can enforce it with a VT.

[lazyitus]

bullrunner said:

Currently im trying to exercse a volountary termination on a HP agreement with BMW.Term was for 5 years with a GFV of £ 17k. To date ive paid over three years payments and have paid over 50% of the value of the agreement. Finance company have advised that a 'Volountary Termination' is not applicable to a HP product and that they would only take the car back and sell it expecting me to make up any difference in the shortfall....Can anyone advise of the Volountary Termination rights of a HP or any other finance agreement please as I feel they are taking the p**s

VT is applicable to Hire Purchase agreements providing it is a REGULATED agreement I.E - that you were not a Limited Company and you financed less than £25K at the time. (The £25K limit no longer applies incidentally)

By the looks of things, if you've been making instalments over 3 years already and have a GFV of c£17K, it looks like you'd have been on an unregulated agreement. Unfortunately, this means you don't have VT rights.

The 50% figure is from the TOTAL AMOUNT PAYABLE which will appear on all regulated finance documents. (This T.A.P figure includes all deposit money, interest charges, admin fees and final payments if applicable.)

You can not be black marked for excercising a legal right. However, lenders are under no obligation to lend you money at any time. It is a lenders right to review each finance proposal on an individual basis and create a credit score that either satisfies their lending criteria or not.

Edited by lazyitus on Wednesday 2nd September 12:34

[a_bloke]

lazyitus said:

bullrunner said:

Currently im trying to exercse a volountary termination on a HP agreement with BMW.Term was for 5 years with a GFV of £ 17k. To date ive paid over three years payments and have paid over 50% of the value of the agreement. Finance company have advised that a 'Volountary Termination' is not applicable to a HP product and that they would only take the car back and sell it expecting me to make up any difference in the shortfall....Can anyone advise of the Volountary Termination rights of a HP or any other finance agreement please as I feel they are taking the p**s

VT is applicable to Hire Purchase agreements providing it is a REGULATED agreement I.E - that you were not a Limited Company and you financed less than £25K at the time. (The £25K limit no longer applies incidentally)

By the looks of things, if you've been making instalments over 3 years already and have a GFV of c£17K, it looks like you'd have been on an unregulated agreement. Unfortunately, this means you don't have VT rights.

The 50% figure is from the TOTAL AMOUNT PAYABLE which will appear on all regulated finance documents. (This T.A.P figure includes all deposit money, interest charges, admin fees and final payments if applicable.)

You can not be black marked for excercising a legal right. However, lenders are under no obligation to lend you money at any time. It is a lenders right to review each finance proposal on an individual basis and create a credit score that either satisfies their lending criteria or not.

Edited by lazyitus on Wednesday 2nd September 12:34

So what we said then?

[lazyitus]

a_bloke said:

mcflurry said:

P-Jay said:

Here's a fun fact when it comes to VT's. They show on credit reports. It's up to any new lender to decide what they do with that information.

And in my experience the same lender was perfectly happy to lend me another PCP on another car after a VT

+1

When we did a VT a couple of years ago, we got a thank you letter from the finance company and a note to say if we were buying another car on finance to contact them for their best deal!

So, what he said then ?

sorry if my input wasn't allowed mixed in amongst yours mate

[a_bloke]

lazyitus said:

a_bloke said:

mcflurry said:

P-Jay said:

Here's a fun fact when it comes to VT's. They show on credit reports. It's up to any new lender to decide what they do with that information.

And in my experience the same lender was perfectly happy to lend me another PCP on another car after a VT

+1

When we did a VT a couple of years ago, we got a thank you letter from the finance company and a note to say if we were buying another car on finance to contact them for their best deal!

So, what he said then ?

sorry if my input wasn't allowed mixed in amongst yours mate

If you're actually adding something to the thread (as i did with mine by adding that the finance company actually 'wanted' my further business, and i also acknowledge the previous posters comment with the '+1' in agreement.) then cool but to repeat exactly what we'd taken time to put previously smacks of i didnt bother to read the thread.

Edited by a_bloke on Wednesday 2nd September 16:41