Voluntary Terminate HP agreement - might it cost me more than the amount I owed.

[brokenmini]

I have entered into a Voluntary Termination of my HP with Startline Motor Finance and the car is getting picked up shortly. The engine has problems and I was wondering if I have any say on what work is done on the vehicle and stop them spending more than the cars market value or exceeding the amount which remained owing. My worry is they put a new engine in and charge me 10K when I only owed 3K and the market value is around 3K. The current condition of the engine might mean its not worth much at auction.

[echat11]

Hi BROKENMINI

Could you not get several quotes for the work / parts, so if they come up with something ridiculous, you can dispute it firstly through their complaints procedure and secondly if need be, take the complaint to the FOS.

Here is an excellent guide -

https://legalbeagles.info/forums/for...on-your-rights

R0b Can you take a look and advise, many thanks.

[brokenmini]

The problem is its kind of a done deal and I'm just expecting a demand for any money spent by them to "make good" before selling. It would not actually be unreasonable for an engine repair to cost many thousands. The thing I want to know is if there is a liability limit in this instance which will stop them say replacing the engine costing 10K. I would of course have settled the 3K in that case. The worst case scenario in my mind is I owed 3K which I could have settled there and then but I Voluntarily Terminated the contract, they spend 10K on a new engine and sell for market value 3K. I then get a bill for 10K? I borrowed around 7K initially. I did read that there was a max liability of no more than 50% according to the Credit Consumer Act so can they only ask for max 3.5K?

[echat11]

What do their T & C's say regards to cost of repairs once the car has been terminated?

Also wait for Rob to advise.

[R0b]

Unless you can prove that you took reasonable care of the car and the engine problem was out of your hand, then I would expect the finance company to seek some kind of payment. The one half rule is correct for liability but that liability can be increased if you have failed to take reasonable care of the car, something the finance company would need to prove. In this case, they would say the engine has failed whilst in your care, and the burden shifts to you to explain why you shouldn't be liable for it.

Any additional liability is probably going to be the difference in price baed on what it would have sold for against what it is worth now. If the finance co. is not aware of the engine failure then you might want to tell them about it, otherwise they will have an agent turn up to drive the car away only to abort the collection as a truckbed will be needed. I would expect them to pass on any costs or expenses as a result which I wouldn't blame them for doing.

[brokenmini]

Thanks for clarifying that. If I put some figures against what you are saying then. I want to work out the worst case scenario. I purchased for 7K, its worth 150 pounds due to engine problems but its market value is 4K with a working engine, my settlement fee was quoted at 3K and I'm sending it back. Lets say they do prove that I was liable for the damaged engine and the only course of action for them is to fit a new engine quoted at 10K. In this worst case scenario could they ask me for 10K (costs of new engine) + 4K (market value) = 14K so they make a profit and sell for 7K again with a nice new shiny engine? Or is there something which would stop them doing this and would ask me for the market value with a working engine and not do any work on it. In this scenario I should have settled the 3K I guess. I want to avoid this so should I write a letter indicating that I will settle the 3K settlement figure as opposed to them trying to fix it and costing me more?

[R0b]

No you are way off the mark.

The true measure of damages is as I said in my last post, the difference in value - in the legal world this is known as diminution in value. It means the injured party is entitled to damages based on what the vehicle would have sold for on the market. First, you find out the value of the vehicle in its current state and then you find out what it would have sold for if it were in a reasonable roadworthy condition. Deduct the two and you arrive at the amount of damages. They will not repair or fix the car it will just go to auction or sold for scrap.

Working example: Current value (£150) - Market value (£4,000) = £3,750 is the amount of damages that should be awarded.

Legally, you can't revoke your voluntary termination once you have given it so offering to settle is not going to happen really and I doubt they will agree to that, but you can try if you like.

[brokenmini]

Ah thank you very much, lesson learned there then for me :-( and hopefully others won't make the same mistake I have done, I should have settled there and then I guess for 3K maybe. I'll update the thread with how much I get a bill for :-(