Car Finance Termination

[Beats]

Hello,

 

I have been looking on the internet at Hire Purchase agreements and have been very interested in the Voluntary Termination rights in HP contracts.

 

I purchased my car in October last year on an agreement over 5 years. I had to change my previous vehicle as my missus fell pregnant and as a result I was left with a negative equity to transfer over of about £2000.

 

The purchase price of the new vehicle was £5000 plus the £2000 - so £7000 to finance. I left it to the dealership to sort it out for me.

 

As I had struggled to get finance in the past (not entirely sure why?) I was presented an agreement by the dealership at 19.76% APR. As I needed a bigger car quite quickly and would be saving over £200 per month on the repayments I agreed - thinking that I was signing up to a Hire Purchase agreement.

 

I have been paying my agreements on time since then.

 

Over the last month or so I have been looking at how I can drastically look to reduce my monthly outgoings, as there are some redundancies starting to materialise at work and I do not want to be left in the sh*t and I have managed to pay off a loan of £2500.

 

Myself and my partner have been looking at much cheaper vehicles and have decided that we would be ok with a vehicle of the same size, only about £4000 cheaper and a bit older.

 

I stumbled upon the Voluntary Termination route yesterday whilst browsing the net at work and read that this is applicable for Hire Purchase agreements taken out since ~2008. I thought to myself that this would be an ideal solution to getting out of the debt and it wouldn't take me an overly long time to save up for it, plus I wouldn't have to pay as much as I would with an early settlement.

 

Today, I have rooted out my agreement to look for the information on my rights to terminate only to find that it says "You have no right to cancel this agreement under the Consumer Credit Act, 1974, the Timeshare Act, 1992 or the Financial Services (Distance Marketing) Regulations 2004".

 

I have looked at the top of the agreement (with Creation) and it says Fixed-Sum Loan Agreement regulated by the Consumer Credit Act 1974.

 

When I approached the dealer to arrange for the finance he suggested that due to the amount of negative equity that I personal loan might have been the better option but I expressly stated that I did not want a personal loan and only wanted Hire Purchase.

 

Am I right in thinking that I have got a finance agreement on my vehicle that is not Hire Purchase? Have I been conned and what can I do?

 

Regards,

 

Dan

[crem]

 

I stumbled upon the Voluntary Termination route yesterday whilst browsing the net at work and read that this is applicable for Hire Purchase agreements taken out since ~2008. I thought to myself that this would be an ideal solution to getting out of the debt and it wouldn't take me an overly long time to save up for it, plus I wouldn't have to pay as much as I would with an early settlement.

You have always had a right to VT a HP contract but it used to be limited to cars up to a value of £25,000. In May '08 this upper limit was removed.

 

 

Today, I have rooted out my agreement to look for the information on my rights to terminate only to find that it says "You have no right to cancel this agreement under the Consumer Credit Act, 1974, the Timeshare Act, 1992 or the Financial Services (Distance Marketing) Regulations 2004".

They all say that at the top. I think that means, "once it's signed, it's up and running" so you can't cancel it before it starts so to speak.

 

I have looked at the top of the agreement (with Creation) and it says Fixed-Sum Loan Agreement regulated by the Consumer Credit Act 1974.

This is a worrying bit although they can vary with their wording at the top. I have a couple that clearly state "HP Agreement" but another one states "Conditional Sale Agreement" which also has the VT clause. A 4th one is headed "FIxed-Sum Loan Agreement" which doesn't give me the VT option. The important bit is somewhere in the small print should be a section headed "TERMINATION - YOUR RIGHTS" In this section it should show the 1/3 paid value and 50% paid value at which time you can hand the car back with nothing further to pay.

 

When I approached the dealer to arrange for the finance he suggested that due to the amount of negative equity that I personal loan might have been the better option but I expressly stated that I did not want a personal loan and only wanted Hire Purchase.

 

Am I right in thinking that I have got a finance agreement on my vehicle that is not Hire Purchase? Have I been conned and what can I do?

 

Regards,

 

Dan

 

If it does turn out that the dealer has given you a loan rather than a HP deal I am not sure what you can do as there will be nothing in writing to prove you specifically asked for a HP deal.

Edited February 6, 2010 by crem

[Beats]

I've just checked the agreement and there is no section that says Your right to Terminate or anything like that. It just tells me how much I will have to pay back as an example and says 1/4 term, 1/2 term etc.

 

It looks like I've been duped.

 

I must say that until today I did not know that a dealership could do this - I had always been under the impression that when purchasing a car from a dealership on finance there were three options; PCP, HP & LP, and indeed when I have searched the net I have always come across the following sort of information:

 

Motor car finance is available in three flavours:

 

• Personal Contract Purchase (PCP)
  
• Hire Purchase (HP)
  
• Lease Purchase (LP)
  

 

So does anyone know if there is anything I can do or am I stuck with a 'bad' debt??