terminating a PCP deal before 50% payment

[mart4n]

I am about to be posted overseas with my job, and obviously won't need my car anymore. I called the finance company today to see about how to terminate the contract early. They said that the only way to do this is to pay the difference to get me to the 50% threshold - about £5,500. They said a better option might be to just sell the car privately and then pay the settlement figure. This would probably still lead to a payment of about £3,500 but still better than paying to hand it back. Is this right? Surely there is a way to terminate contracts like this early?

Thanks

Martyn

[Amethyst]

Did you ask them for a settlement figure?

Also I'm not sure you can sell a car with outstanding finance on it ? Seems a strange thing for them to advise really - it should be settled first and then sold, ( although that could be difficult financially ) as the car isn't yours to sell until the PCP is paid up.

R0b ?

[mart4n]

Yeah I thought that. That was there advice, and I got the settlement figure by choosing the wrong options on the automated menu. I assume like most things there is a way to terminate early, but they'll take a bit of a hit and are keen to not encourage it. If someone loses their job they'll find it difficult to force them to make payments until they get to the magic 50%.

[R0b]

Also I'm not sure you can sell a car with outstanding finance on it ?

You can't sell without their permission otherwise that could be seen as theft under criminal law or wrongful interference with goods under civil law. If the advisor is suggesting that you should sell it privately, I would take that as express consent from the finance company that you can go ahead and sell it. However, I would caveat that by saying you would be in a much better position to argue that point if you had some sort of evidence e.g. in writing or you recorded that telephone conversation.

pay the difference to get me to the 50% threshold - about £5,500

A common misconception by both consumers and finance companies. The Consumer Credit Act does not require you to have met the 50% threshold before terminating the agreement and that is made quite clear in the provisions where it says that you can terminate at any time before the final payment becomes due - there is no qualification.

However, on termination the difference between what you have paid and the 50% is essentially a debt by which the finance company could sue you for the recovery of it. However, I think that would not sit very well with the Courts because finance companies are bound by the FCA rules in particular the CONC Handbook. Rule 7.3 of CONC talks about dealing with customer fairly when they are in debt and in particular the following rules will be of use to you:

7.3.6
Where a customer is in default or in arrears difficulties, a firm should allow the customer reasonable time and opportunity to repay the debt.

7.3.10
A firm must not pressurise a customer:

(1) to pay a debt in one single or very few repayments or in unreasonably large amounts, when to do so would have an adverse impact on the customer's financial circumstances;

(2) to pay a debt within an unreasonably short period of time; or

(3) to raise funds to repay the debt by selling their property, borrowing money or increasing existing borrowing.

The reality is that if you want to terminate the agreement, in my view you can do so and then explain that you are unable to afford the difference in one lump sum but are prepared to pay a reasonable sum each month to pay it off.

Most financial companies that I have come across so far will say that they do not accept your termination because you have to pay 50%. As above, this is not correct and you should take into account the fact that these are just low-level staff. I suspect that if they tried to take you to court over it, then they would have a hard job arguing that the right to terminate is subject on paying the 50% because the Consumer Credit Act doesn't say that or come anywhere near to saying it.

You will need to make a decision on whether you are prepared to take the risk or not. If you are moving abroad I would suggest you tell them that and ask them that they should only correspond to you by email unless you have specifically told them otherwise in writing.

[mart4n]

Thanks, I was thinking about trying to form some sort of agreement with them. Whether I hand it back and agree some payment schedule for an agreed sum, but less than the difference to 50%. Otherwise I'll look to sell with their permission as it at least minimises the cost.

[johnjo666]

Hi, I have recently voluntarily terminated my car with VWFS. I have terminated prior to reaching the 50% point still owing a substantial amount of money due to loss of income mainly due to COVID. I terminated early August and VWFS has requested outstanding balance to be paid within 14days. I did however write to VWFS confirming I wasn't in a position to pay in full and requested to pay in installments the remaining debt, furthermore, I offered a full and final settlement to clear the balance. After I issued that letter, VWFS emailed requesting my income and expenditure which I completed and returned the same day. 5 weeks have passed and I still haven't heard anything so I recently wrote to VWFS confirming this and requested a response. I have since checked my credit file and they have marked 3 missed payment or more therefore my credit has now plummeted! As termination completed in August, shouldn't this remaining debt be treated as a new agreement? In addition to this, I am also fighting excess millage. Again, due to COVID I had to cancel my train season ticket and travel to and from work in my car as I was a key worker which has inevitably increased millage from March. Any support would be appreciated.