VT Rights

[berne902]

Hi,

At what point does one gain full VT rights ? I mean the VT rights which allow one full CCAct backing, i.e. If I owe 5K to meet the 50% mark of the overall finance borrowed. I call the finance company , tell them Im using the VT option, they say you still owe 5K to meet the 50% mark of the total amount borrowed......so for example I say Yes I know lets agree on repayments of that 5K lets say 50UK pounds per month over 8yrs ?, if repayments are accepted by the finance company, do I get full VT rights from the date of the first 50 pound payment? I need to know this so that I can assume I will not be liable to pay any xcess mileage charges due ?

All good advice welcome,

fonaspin

[Huxie]

do I get full VT rights from the date of the first 50 pound payment?

No. The right to VT requires that you pay 50% of the total amount payable under the PCP agreement. If you haven’t paid this amount then you cannot invoke the right.

[berne902]

Hi,

Huxie....thanks for the reply, I just found a differing view though:

The law relating to voluntary termination
There are several provisions under the CCA which provides certain rights to a debtor in relation to voluntary termination. I have set out the provisions below and highlighted the key words in each section which are most relevant.


Section 99: The right to terminate the agreement at any time

(1) At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement.

(2) Termination of an agreement under subsection (1) does not affect any liability under the agreement which has accrued before the termination.


So I dont think I will be liable for xcess mileage as long as the above CCA regulations exist.

Thank you,

fonaspin

[Huxie]

Well I’m just a lay person with no specific knowledge of the law so I was just giving an opinion based on my reading of the various stickies and posts on these forums.

If you read R0b’'s sticky in it’s entirety, it is clear (to me) that to effect a Voluntary Termination under the terms of the CCA then you must pay, or have paid, 50% of the Total Sum Payable.

---

Section 100: Liability is restricted to 50%

(1) 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.

(4) If the debtor has contravened an obligation to take reasonable care of the goods or land, the amount arrived at under subsection (1) shall be increased by the sum required to recompense the creditor for that contravention, and subsection (2) shall have effect accordingly.

---

So to me it’s simple, once you’'ve paid the 50%, you'’re entitled to exercise a Voluntary Termination.

And with regards to excess mileage, there is (according to R0b) no legally binding case law that supports the assertion that by VTing you will not be liable to pay the charges.

[Huxie]

And have look at this post from R0b where it appears someone has been found liable for excess mileage charges.

[R0b]

The right to terminate is not contingent on paying 50% first. It is a unilateral right and what it simply means is that if you do terminate, you are liable to pay the remaining balance otherwise the lender can pursue you for it, but it does not mean it must be paid upfront before the VT right can be exercised. This is what most lenders say and insist upon but the reality is, section 99(1) does not say that Vt is subject to you paying 50% of the total amount, rather it says that you can terminate by giving notice at any time.

Huxie as for that link you provided to the thread about losing on excess mileage charges, the hirer exceeded the agreed mileage by some 50-60k miles so that case could potentially be seen as a one off if, for example, compared to someone going over by 5,000 miles. Anyway, I have suggested that the decision was flawed in some areas and at least unclear as to the real decision behind it.

The VT Guide has also been update to reflect my thoughts on how to approach some of their arguments. The reality is, until it is decided upon by the High Court or above, any claim for excess mileage is open to interpretation and will depend on the circumstances of the case. The main point being that lenders have no evidence which supports the fact that taking reasonable care also includes the duty to avoid financial losses whereas there is sufficient evidence from a defendant;s perspective to suggest otherwise. When you weight up the lender's evidence to support it's claim (which is nothing but its own interpretation) against the defendant's (plenty of documentation and case law), that evidence should weigh heavily in favour of the defendant. Of course it also depends on how well you make that argument on the day.

[Huxie]

The right to terminate is not contingent on paying 50% first. It is a unilateral right and what it simply means is that if you do terminate, you are liable to pay the remaining balance otherwise the lender can pursue you for it, but it does not mean it must be paid upfront before the VT right can be exercised. This is what most lenders say and insist upon but the reality is, section 99(1) does not say that Vt is subject to you paying 50% of the total amount, rather it says that you can terminate by giving notice at any time.

berne902 Apologies for giving you wrong information. Hopefully R0b's post provides the answer you're looking for.

Huxie as for that link you provided to the thread about losing on excess mileage charges, the hirer exceeded the agreed mileage by some 50-60k miles so that case could potentially be seen as a one off if, for example, compared to someone going over by 5,000 miles.

R0b I understand from a previous posting that BERNE902 has exceeded the agreed mileage by 44,500 so somewhat analogous.

Anyway, I have suggested that the decision was flawed in some areas and at least unclear as to the real decision behind it.

It was a decision nonetheless and one which found in favour of the claimant, resulting in the excess mileage charges having to be paid. This was something I thought berne902 should be aware of.


berne902 These VT threads frustratingly tend to peter out without any conclusion so please keep us updated as you progress with the VT.

[Huxie]

R0b

In your sticky A guide to voluntary termination: Your rights at part 7. FAQs it states:

(bold and red are my emphasis)

Can a lender prevent me from terminating the agreement voluntarily?

The ability to VT an agreement is set out in law and lenders cannot carve this out of the contract. Furthermore, the agreement must also state your right to terminate and include the right to terminate once you have met the 50% mark

Can you explain what this means in the context of your post above as this may be where I've misunderstood,

[berne902]

Hi ,

Re: Rob when time permits: So lucky to have your advisories: Thank you, long may they continue:
Im real new to this site, ( but very glad of same ) via unforseen realities.

Re: PCP AGREEMENTS; does one have full VT rights from date of signing a PCP, or..., must the borrower have met the 50% mark of the total amount borrowed , to gain full VT rights?
I am led to believe that the current CCA does state: " A borrower may at 'anytime', initiate a VT application by notifying the relevant lender via voice ( record ) or in writing ( with copy of same ), and, in having gained proof off, so gain, FULL VT rights no matter what stage the PCP may be at, ( As long as the borrower agrees to a repayment plan to reach the 50% stage of the overall amount borrowed as per LAW on this CCA regulation ).? If this is the case, does a PCP signer gain protection via the current 2018 version of the CCA, from any addtional penalties which lenders may or may not decide to pursue.

CCA expert advisory requested: ,

fonaspin

[R0b]

Huxie

I understand from a previous posting that BERNE902 has exceeded the agreed mileage by 44,500 so somewhat analogous.

I assume that is from another thread then, as I didn't see it in the initial post though you are quite right it is the case. Since the decision is only county it is non-binding and other judges are free to make their own decision. Ultimately, it comes down to the hirer to persuade the judge based on the evidence before it.

The ability to VT an agreement is set out in law and lenders cannot carve this out of the contract. Furthermore, the agreement must also state your right to terminate and include the right to terminate once you have met the 50% mark

Again, good spot and I would say what I have put is not entirely correct. As section 99(1) suggests, the right to terminate can be exercised at any time. It is not subject to the lender's acceptance nor is the hirer legally obliged to sign paperwork before that right can be exercised. It is an indefeasible right and of course it is usually the lender's policy to "refuse" to accept the notice of termination until that paperwork is returned but that is their prerogative. This is simply another hurdle that hirers have to overcome and another way for lenders to make life difficult when exercising your VT rights. There's nothing in the CCA suggesting that the right to terminate is conditional, otherwise it would have made this explicitly clear. I have now amended this wording to reflect my position.

[berne902]

Update: So just got off phone with finance company, I will not pay any mileage charges ( 6K ...so thankful for that and the legislation ). Now the finance company has said , recovery fees 150.00 will need to be paid I agreed ( on goodwill, yes I know VT means I do not have to be paid but hey 150.00 )...car will be assessed for auction now, I have taken photo and video of current wear and tear and exterior and interior body work all is good there...oh, all tyres are illegal, so I had four new tyres with alloys unmarked in storage so I put them into the car as another goodwill gesture.

Headsup: The car will not start : Mercedes say the car needs a new DPF....( PLUS )....I want to meet recovery man when he calls to load car to auction so I can witness paper and car transfer, but not sure if this will be possible?

FC have papers in post re Im not sure, I got initial papers from FC BUT DID NOT SIGN them ( ThankU Legal Beagles ) ...I called finance company to stop any future payments until we agree on a longterm repayment plan ...4800.00 to 50% of PCP . Unfortunately ..FC...have not stopped my monthly bank request for the 430.00 /m , and Im slipping into credit file problems...Finance company say this is unavoidable ? I have agreed 50.00 / month again goodwill. So in three weeks another payment will fail and deeper I will fall into credit file turmoil? FC say sorry Mr B but you are looking at 6yrs of CFIle turmoil ???

Ive read on LB that my CFile should be unaffected apart from a VT mark on my file indicating that I indeed did VT an agreement and that that mark may or may NOT effect any future app for car finance?

Seeking clarification on this one, all good advice welcome.

fonaspin

[Huxie]

Ive read on LB that my CFile should be unaffected apart from a VT mark on my file indicating that I indeed did VT an agreement and that that mark may or may NOT effect any future app for car finance?

Seeking clarification on this one, all good advice welcome.

You are correct in that R0b's 'A guide to voluntary termination: Your rights' states:

Does voluntary termination affect my credit file
No it will not affect your credit rating at all.

R0b

Does the fact that berne902 has not met his Section 100 liabilities i.e.

• to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid
• has contravened an obligation to take reasonable care of the goods (car doesn't start and requires repair)

impact on the above statement?

berne902

Feel free to ignore the following, I do tend to overthink things :-)

Did you send a voluntary termination letter to the finance company? If not, were you clear in your telephone conversation that you wanted to invoke your statutory right under section 99 of the Consumer Credit Act 1974?

I'm surprised that the finance company have said upfront that you will not pay any mileage charges and as you have said, in previous threads, things like:

So I have had to have my 2014 Merc repo

Car is given to finance company

Car is awaiting recovery to auction, finance company say they will take whatever the car sells for off my total amount owing

it may be that this matter is proceeding not as a Voluntary Termination but as a Voluntary Surrender, with all that entails.

Hopefully the paperwork the finance company are sending should make this clear.

[R0b]

Does the fact that berne902 has not met his Section 100 liabilities i.e.

• to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid
• has contravened an obligation to take reasonable care of the goods (car doesn't start and requires repair)

impact on the above statement?

What should happen, in theory, when you VT is that the lender should update their records to notify CRAs that the agreement has been terminated and the reason is VT. CRAs should then update your credit file to reflect that position and mark the account with a VT (though some lenders might inform the CRAs to mark it as settled without any VT mark). The purpose of your credit file is to show whether you are a risk if someone were to give you credit and what is the risk of you not meeting the monthly repayments.

In terms of not having met the 50% mark or failing to take reasonable care of the car, they are secondary and so they should not be showing on your credit file. The outstanding balance that needs to be paid to meet the 50% mark should be treated as an outstanding debt (subject to the lender complying with any applicable FCA rules in the CONC Handbook) and both sides should seek to make arrangements to have that debt repaid. Likewise, the failure to take care is also to be treated as a breach of contract and the usual process should be followed i.e. Pre-Action Protocols, issue of claim etc.

Neither of which should appear on your credit file because they do not form part of the credit* that was loaned to you under the agreement and the purpose of your credit file is to keep an accurate record of whether you met the monthly repayments under the agreement until that agreement ceases.

* I suppose there is an argument to say that the outstanding balance does form part of the credit originally loaned to you and so the lender might say that it is perfectly entitled to report that balance as outstanding. Strictly speaking, that is true but your obligations to make the repayments each month were rescinded when termination of the agreement took effect. As far as I am aware (correct me if I am wrong), the lender cannot report the agreement to CRAs as closed and then continue to report payments as being missed or late. It either has to keep the agreement active and report monthly updates or close it and no further reports on that agreement is made. Obviously if the lender is doing the former, then it is clearly not keeping an accurate and up to date record because it is inaccurate to suggest the agreement is still open and remains active when it actually terminated. This is a moot point and not something I have seen explored before the courts.

Lenders such as BMW don't always close the account down straight away and report late payments or possibly defaults if there are any alleged charges such as vehicle damage or excess mileage. I am not aware of any others doing this just yet but it might be possible.

Bit of a lengthy post but thought I would explain my view of things (which is just that) and no doubt others will have a different opinion.

[berne902]

Hi,

Again thank you, I do feel that the CCA is a agreat thing and I have learned a lot in recent times from the act.

If FCompany is advised in writing and via voice ( recorded at their end ) that from 25/01/18 a VT process was invoked, can the FC still allow regular
( unmissed ) monthly payments to remain in effect ( even though the FC was asked to cease the request for monthly re-payments , re the -700/m drop in monthly budget ) I also told FC that I had cancelled direct debit for 430/m from mid January 18.? I have set up a 50.00 / Month standing order to maintain goodwill in this regard.

It seems that I need now to write a letter to Financial Ombudsman to outline this and see can the FO put the FC write in regard to my credit file...having only a VT mark on my file seems about write, BUT, current FCompany does not see it that way ( they are happy to keep active the 430/m due payments and this will show as failed repayments and do dire damage to my credit file. Which will result in no car loan being possible, to get back on the road, to earn money, to repay the PCP remaining balance of 50% ( 5K ).

Late Update: So after offically invoking VT via writing or voice and having a record of same, the lender only has one choice which is to contact the CRA and put a VT mark on the creditfile of the borrower , ( some lenders just close the account ).

BUT

As suggested to me , lenders cannot keep the agreement OPEN and notify the claim to the CRA that monthly repayments are being missed, ie. I cancelled my direct debit of 430/m to the FC from 25th January 18, but the lender has stated they are obliged to report to the CRA of any further missed monthly repayments.

To my humble opinion the CCA allows a PCP signer to VT at anytime. When one activates this right, it means the lender has only one option, which is to notify the CRA that such a move has been made by a borrower and the agreement is from the date of invocation officailly closed. This means that any further monthly payments are void and cannot be reported to the CRA as a mark against the borrowers credit file.

Lets see how the Financial Ombudsperson sees this?

Thoughts,

fonaspin

[berne902]

Hi...

Im looking for clarification on a CCACT technicality. Under the CCAct ....does a Sole Trader have full protection of the CCAct ? I heard only private individuals are fully protected by the CCAct?

berne902