Voluntary termination

[CM Brown]

My son took out a finance package for a car with FCA Automotive Services.
After a couple of years he is it nearly impossible to meet the payments.
He has sent them a copy of your letter about voluntary termination to which they replied your agreement is a motor loan plus and voluntary termination is not an option.
They said he can either sell the car and pay off any shortfall or sell the car and have lower payments.
He is still paying his monthly payments, with some help from members of the family.
What is our next step we cannot keep paying out.
The car in now parked up with no insurance.
Any advice gratefully received , many thanks in advance

[R0b]

Re: Voluntary termination

Morning,

It sounds like your son has signed a fixed sum loan the same as what you would get from the bank but they pay it directly to the dealer instead of you. Fixed sum loans do not offer voluntary termination as it only applies to hire purchase or conditional sale agreements. However, that does mean that the car is owned by your son and he could sell it off to pay off some of the monies but is unlikely to cover all of it, depending on whether he is using it or needs it.

If you can upload a copy of the agreement with personal info removed I can take a look and confirm your options. You can upload photos by clicking go advanced button and then the paperclip icon or you can upload to an image hosting site and copy the link for forum thumbnail.

[CM Brown]

Re: Voluntary termination

Hi sorry for the delay , it is a fixed sum loan just got the paperwork off him, they have sent him a settlement figure of £8900 the car is with £5000 at the most, what would be his next step.
my son is ready to just stop paying and see what happens

[R0b]

Re: Voluntary termination

Is the settlement figure the remaining balance outstanding or does that the actual early settlement amount when the rebate is taken into account? If you ask for an early settlement figure they should under the consumer credit act give this in writing with a breakdown of how it has been calculated.

Has your son considered the effects of what will or could happen if he just stops paying? They will apply a default, possible go to court and obtain a CCJ all of which affects his credit file for the next 6 years. It might be best to negotiate and say that the repayments are now unaffordable and would like to make reaosnable monthly instalments to repay the amount back over a period of time.

[CM Brown]

Re: Voluntary termination

Is the settlement figure the remaining balance outstanding or does that the actual early settlement amount when the rebate is taken into account? If you ask for an early settlement figure they should under the consumer credit act give this in writing with a breakdown of how it has been calculated.

Has your son considered the effects of what will or could happen if he just stops paying? They will apply a default, possible go to court and obtain a CCJ all of which affects his credit file for the next 6 years. It might be best to negotiate and say that the repayments are now unaffordable and would like to make reaosnable monthly instalments to repay the amount back over a period of time.

It is the total amount payable, they have told him to sell the car and pay the balance, I always thought you couldn't do this as the car is not his property.
Will advise him to contact them and try to negotiate lower payments.
Many thanks for your advice

[R0b]

Re: Voluntary termination

On a fixed loan sum the car belongs to him from the start, its not a hire purchase but a sale agreement. If the car is worth 5k then he could sell it and use it to pay off the amount. however if as you say the sum is the total maount payable left, then that is not the correct amount for early settlement. I will try and find the right legislation to help you but woudl advise to write to them back

[R0b]

Re: Voluntary termination

Right, here's some of the stuff you need:

s.97 of the CCA says that the creditor must provide a statement the amount required to discharge the debtor's indebtedness within the prescribed period (I believe its 7 days) together with a statement showing how the amount is arrived at. Failure to comply means that the creditor is not entitled to enforce the agreement whilst the default (that is the failure) continues. The 7 days begins on the day after the creditor receives the request.

s.95 of the CCa allows for a rebate on early settlement which is set out in the Consumer Credit (Early Settlement) Regulations 2004.

Effectively the rebate is the interest charged for the remaining months left of the agreement which is what is discounted so you only need to pay the total remaining amount payable less the interest. the finance co is entitled to a small amount of compensation but I don't want to go in great detail on that just yet.

So if you write to them and say you want to settle early in accordance with the sections and legislation above, then they should get back to you within the relevant time period. If they don't the agreement becomes unenforceable until they do, but they in most circumstances there is short window when that settlement amount is valid otherwise it would need to be re-calculated again.

Hope that makes sense, if you need any further assistance let me know