Voluntary Termination - Query around timescales

[jackmarak]

Hello all,

Person A has now paid more than 50% of the total debt owed (including interest and balloon payment).
They have decided they want to pursue a VT.

Vehicle has done 15k miles in 3 years. This is considerably lower than the 32k mileage allowance (at end of 4 years).

Vehicle condition is better than reasonable with some wear and tear. Car will have latest service and first MOT by early April 2019. Car already had two services previous to this one.


The questions around timescale are:

How soon after the VT is served can the DD be cancelled?

Does there have to be a reply/confirmation before the DD can be cancelled?

If so, how long does it usually take for this "Acknowledgement"


Person A is trying to avoid a scenario where they'd end up paying for two cars in the same month.
Person A also can't be without car for work and childcare reasons.

New car could take 3 months to arrive. When would be best to start the process?

[R0b]

How soon after the VT is served can the DD be cancelled?

As soon as you are confident finance co. has received your notice. For evidential reasons, sending by recorded delivery (or at least obtain proof of postage) and by email to the finance co.'s customer service or similar would be your best way of ensuring notice has been given. My view is usually allow at least 48 hours following notice given before cancelling the direct debit.

Does there have to be a reply/confirmation before the DD can be cancelled?

See above, but do be aware if you have any additional products such as insurance which might continue to roll.

If so, how long does it usually take for this "Acknowledgement"

Sometimes, never. In most cases it could be a week maybe longer. The Consumer Credit Act does not require you to wait for acknowledgment or acceptance, it merely states that you have to give notice of termination to the finance co.

Once you VT, legally speaking your right to use the car ends. So you could ask to continue using the car but usually the finance co. is not going to know if you use it or not (unless they have a tracker on the car) but you will always remain liable to take care of the car whilst it is in your possession. Alternatively you could give notice of termination for a date in the future i.e. 3 months from now. that means you continue to pay the monthly instalments and allows time for the finance co. to make arrangements for an agent to collect on the date of termination (in theory).

[jackmarak]

The legendary Rob replies, thank you!
I've read some of the stuff you've put on there so thank you for that aswell.

Based on the information you have given me, can I safely assume the following:
(Hypothetical timeline in chronological order)

>Person A receives notice that they will receive their new car in exactly a months time (Let's say 28th April).
>Person A then serves their VT immediately via recorded post and email
>Person A then waits 2 business days and cancels their DD.
>Person A awaits letter from Finance.co to confirm date they will pick up car.

As for tax, insurance etc. The timings of the VT will be based around a time that they have already gone out for that month.
I'm assuming it doesn't matter about waiting for car payment to go out for that month because the 50% pay point has already been past.

Thanks again for the reply.

Kind regards.

[R0b]

In short, yes.

There are a multitude of ways of going about it post VT notice, it just depends on how aggressive you wish to be. For example:

a. You don't need to give 2 business days, it can be calendar days.

b. If you give sufficient notice i.e. one month to collect you can say within your letter that you believe one month to be a reasonable period of time to collect the car and, if you are forced to to keep it in your possession beyond the date given, then you will charge the finance co. a daily rate of X until such a time they come to collect it.

c. Alternative to the above, you can serve notice of intention to sell it and return the proceeds to the finance co. less costs incurred by you.

Also, when I mentioned added products above, I meant the add-ons incorporated into the agreement such as GAP insurance, accidental damage cover etc.

[jackmarak]

I see, thank you.
Say the VT has been served, 2 days later the DD is cancelled. Assuming the car insurance is with another company and is separate all together, at what point can that be cancelled? Does the peeson have to keep the car insured until the finance co turns up to get it?

[R0b]

When the agreement is terminated, your obligations fall away. Anything that requires you to pay over and above the 50% threshold or which is not already paid is unenforceable.

On termination, you become what is known as an involuntary bailee (unwillingly in possession of someone else's goods) and your duty merely extends to ensuring the car is kept in a reasonable condition; nothing more, whatever the finance co. Says you must do.

Of course you can offer to keep the car insured, at the finance co.'s expense but if you do anything that has a financial burden, document it in writing.

[jackmarak]

Thank you for the reply!

Okay so to recap...

>Person A receives notice that they will receive their new car in exactly a months time (Let's say 28th April).

>Person A then serves their VT immediately via recorded post and email. *Although this could be done much later If the car is still needed and the payment hasn't come out for that month yet (preferably 3 days before payment due to give more than reasonable notice for action below).*

>Person A then waits 2 business days after VT served and cancels their DD. *Around this time car tax and Insurance can also be cancelled.*

>Person A awaits letter from Finance.co to confirm date they will pick up car. *The car doesn't have to be declared SORN or anything else, the only duty is to ensure the car is kept in a reasonable condition*

Am I on the right lines with this logic?

[R0b]

If the vehicle is sitting on private land then I would suggest you SORN it. If it's going to be public road then it would be sensible on your part to keep the insurance running a little longer for a reasonable period of time (but make it clear in your VT letter when the insurance will be cancelled), just out of courtesy.

[jackmarak]

Hypothetical plan:

New car arrives 19th
VT served 19th
DD cancelled 21st

When would it be acceptable to cancel insurance?

Person A probably needs to ring insurance company and enquire about how the cover is given.
i.e. if you pay 14th of each month, does that cover you from 14th to 14th. Or is start of month until the end of month.

[jackmarak]

Hi rob when serving a VT.
Is it best to ring up and let them know the day I do it?

I know I'm not obliged by law to do so but do you think it will urge the finance co. to respond or at least look out for it?

Kind regards.

EDIT: forgot a word

[R0b]

What is considered a reasonable time depends on the facts and how much notice you've given them. As a general rule, 14 days is considered a reasonable time but it is not absolute and it may be that a longer or shorter period may be considered reasonable. If I were in your position, I would say 14 days is a reasonable time but if you have already paid for that months' insurance then it probably wouldn't hurt to keep it running until the end of the month, on the assumption it's not costing you anything more.

Whether you want to call RCI or not is up to you, it's highly unlikely the person you will be talking to is going to receive your notice. Just bear in mind, exercising your VT right over the phone is not a valid form of termination, it must be made in writing.

[jackmarak]

Hopefully the way it's being lined up, there will be 14 days left of already paid insurance from the day the VT is sent.

So 14 days left of insurance (from the date of the letter) and 14 days notice to pick up the car? Is that acceptable?
Or is it acceptable to say "a months notice to arrange pickup of the car but please be aware that after 14 days from this letter, the car will no longer be insured" ?


I suppose Person A just wants to know that their letter (and email) is going to the right place and is being acknowledged. Avoiding a scenario where the letter doesn't go to the right place (or isn't noticed) and they end up being told they are now in arrears for cancelling a DD.

That was the original idea behind the phone call. Maybe to even record it as further proof that a VT was sent.

[jackmarak]

Hi R0b

This is a long way off and may not even happen but Person A likes to be prepared.

You mention case law:
"b. Whilst the contract may state that the vehicle is assessed according to the BVRLA Standard, the CCA 1974 in fact says that you are only required to take reasonable care of the vehicle. In my view, the BVRLA Standard sets a higher standard than the reasonable care standard (which is a low standard) and according to Section 173, any contractual term that imposes additional liability whether directly or indirectly that conflicts with the CCA 1974 is deemed void. There is case law that does provide a helpful definition of what a hirer might be expected to do in terms of taking care of the vehicle."

Where can I find this case law?

I ask because a split on the front of the steering wheel may cause problems in the future. This is purely cosmetic and I believe it should fall under "reasonable care of the vehicle" especially since the vehicle will be 7000 miles below what is to be expected by the time it is handed back (Swings and roundabouts ey?).

Another question surrounding a potential scenario:

Creditor has been given two weeks notice to pick up car and has been advised that the insurance will expire at the end of those two weeks.
After the 2 weeks, the creditor still hasn't picked the car up.

Assuming the insurance has now expired, which option below makes the (ex)debtor least liable for the car

• Car is declared SORN on private driveway.
• Car is taxed but on public pavement.
• Car is not taxed but on public pavement.

Kind regards.

EDIT: Typo

[R0b]

Brady v St Margaret's Trust is the case and if you click this link you can find the relevant quotation on that thread at post #3.

In answer to your second question, you can SORN the car without tax or insurance if it is not on a public highway and is instead on private land (click here).

You could follow up your letter to the creditor and say, you've already given notice of the insurance expiring no effort has been made to collect it and so they will need to make their own arrangements to insure and tax the car.

If you are storing it on private land, you could (or not) offer a further 7 days to collect after that you will charge them a daily rate of X as storage costs until such time the car has been collected. Where X can be anything reasonable either £5 or £10 per day and even up to any reasonable cost of parking a car in a multi-storey over a 24 hour period though if you intend on charging that much, take the average of the 3 popular car parking company prices and stipulate that in your letter.

They'll probably refuse to reimburse you for those storage costs but then its up to you whether you puruse that to court. I reckon if you took a chance, you'd be offered something but maybe not all of the costs unless you tried it in front of a judge.

[jackmarak]

Thank you for the reply R0b

Does the debtor hold more liability if the car is on their drive (SORN) than if it was on the public pavement untaxed?