Voluntary Termination

[angelnatty]

Hi Everyone

I was wondering if anyone can possibly help me. I have a car with Honda Finance. I have paid off more then half of the value of the car, but no longer can afford the monthly repayments. I am aware that due to already having paid off more then 50% of the cars value, I am now in a positon to be able to do a voluntary termination on the car, under the consumer credit act 1974. I need to write a letter to honda finance and give them the 30 days written notice, but im not sure how to word the letter properly?

I would very greatfull if anyone can help?

many many thanks

angelnatty

[enaid]

Re: Voluntary Termination

TO BE USED WHEN YOU WANT TO TERMINATE A HIRE PURCHASE AGREEMENT WITH YOUR CREDITOR

(Your home address)

The Date

To:

Dear Sir/Madam

Voluntary Termination of Agreement
Account No:
Car Make/Model/Registration No

I am/we are writing to notify you that I am/we are exercising my/our right to terminate the above agreement under Section 99 of the Consumer Credit Act 1974.
I/we understand that I shall/we will be liable to you for the amount calculated under the formula in Section 100 of the Consumer Credit Act 1974.

Please send me/us details of how the vehicle can be returned to you.
Please confirm receipt of this request in writing by return.

Yours faithfully
Your Name


Also keep a copy and send recorded delivery.
Enaid x

[angelnatty]

Re: Voluntary Termination

Thank you so very very much Enaid, your a star.

Angelnatty x

[Glenn UK]

Re: Voluntary Termination

Just a thought, as much as i am sure you are not returning the car for the fun of it, you need to check to find out what the impact of returning the Car and terminating the agreement will be on your credit file.

it may be the last thing on your mind but you do need to understand the impact that terminating the agreement may have.

I have no idea if they will put default markers on your file, but if they do/can you need to know in case there are other options open to you.

JMHO

Glenn

[Jester]

Re: Voluntary Termination

Also, closely consider whether it might be better for you to sell the car yourself and then settle up that way. When they re-possess a car in this fashion, the vehicle is put into a Car Auction. Therefore, it may not necessarily be sold for it's market value price. You will still be held liable for the outstanding monies owed.

I made this mistake when I let my Audi go on a voluntary basis around this time last year when I found myself unemployed and unable to make the monthly payments. The car was sold well below market value and I got clobbered with a huge sum of money still to pay. They are quite within their rights to do this.

VFS even advised me that I may be better selling it myself, but I thought that as I couldn't afford the payments then they would not chase me for the money. How wrong I was.

Also, remember that in the current climate, used car prices are falling through the floor so an auction really isn't the best place to allow it to end being sold...but that is where they will take it !!

[subu]

Re: Voluntary Termination

Hi, i am new to this so hope im doing it right.
I am considering a VT on my car and have read a few of the threads.
Are you allowed to sell a car that you own on finance.
Now im not sure if i should sell the car myself and pay off the debt with the sale money, even though the car isnt even worth half ot what i owe.....help.

[shell]

Re: Voluntary Termination

I have VT'd (at different times in the past) 2 cars. Why? Well the dealer actually told me that it's quite common for buyers of second hand cars to just keep them for a couple of years, then hand them back and get a newer model. So I did.

There may be a marker on your credit file, but it shouldn't affect your request for credit (it didn't mine).

Also, unless you have mistreated the car, once you have paid half, that's it. So to tell you they haven't managed to make up the difference at auction and expect you to make it up is a bit dodgy. Cars lose their value rapidly after a few years.

Jester, who told you they are within their rights to do this?
------------------------------- merged -------------------------------
Not being cheaky, sorry but rereading last post of mine, that's what it sounds like.

What Imeant was, I don't understand why Jester was told they are within their rights cause if you read the 50% rule, there is no mention of it. In fact as I understand it, if after paying 50%, the goods are still in reasonable condition, considering their age, you decide to hand back the goods, then you have done all you need to do. End of story. You have done your bit, what the company now does with the goods is up to them.

[Muggles2012]

Re: Voluntary Termination

I have written to my car finance company (Fortis Lease) with the standard letter of Voluntary Termination of Agreement. I'm almost at the 50% point, and upon sending the notice, have not been able to pay this month's car payment.

They have sent me the following letter;

Dear ....

I write with reference to your recent request to Voluntarily Terminate your Hire Purchase Agreement.

In accordance with your rights under the Consumer Credit Act 1974, to reach half the amount payable, you would be required to pay £375.55. Please either forward us a cheque for the above amount or contact us by telephone to pay by debit or credit card. Once this has been received, we will forward you the Voluntary Termination Form to sign and return.

If you decide not to Voluntary Terminate please put this in writing to us, thereafter, the Agreement will continue as normal.

etc.

The original loan was £18.775 at 7.7%, and the balance at the beginning of the year was £9435, so they may be correct in me being some £50 (+interest short of the 50% mark). The £375.55 is the value of the missed payment from the end of last month. Can Fortis Lease refuse me my right to VT until I clear this arrears payment? My understanding of Section 99 is that I can terminate at any point during the Agreement, and that these arrears are encompassed within the formula calcumation in Section 100 once they assess the car and present me with a final bill.

LOCARS says....

Consumer Credit Act 1974
Section 99 of the Consumer Credit Act gives the debtor the right to terminate a hire purchase agreement, simply by giving written notice of termination. The right to terminate applies at any time before the final payment becomes due, unless the creditor has already terminated. Contrary to the line taken by many finance companies, the debtor need not have paid half the total amount payable, and nor do they have to pay any arrears, before exercising the right to terminate.
Sections 99 and 100 set out the debtor's liability on voluntary termination. The sections are complex, but their main effect can be summarised in brief as follows. If the sum of payments made and arrears before termination exceeds 50% of the total price, than the debtor is only liable to pay the arrears. Otherwise, the debtor is liable to pay half the total price, less any payments already made.

Also, are Fortis Lease able to refuse my right to VT and then issue a DP notice for the arrears and thus force me into the position of owing them far more money than is set out in Section 100?

I've Googled and I can't find an entry on any of the usual advice forums from people being asked to settle arrears prior to a finance company accepting VT, so I hope someone here with experience, or the legal nouse might be able to advise me how to deal with this letter and progress the VT, hopefully before the company issue a Default Payment Notice for this arrears payment.

Thanks in advance, even if you just read me post.

[Muggles2012]

Re: Voluntary Termination

Update on the above....

National Debtline are quite clear in their opinion that the finance company cannot prevent you from VTing your vehicle if you have outstanding arrears, or until you pay the 50%. Their opinion is that you exercise your right and that all monies owed under the calculation in Section 100 become an outstanding unsecured loan. That appears to be in line with that LOCARS post on their website.

However....

Consumer Advice say that if you have an arrears payment due, or if you have not reached the 50% point, you are in breach of your contract UNTIL you pay the balance, and only once you have settled that balance are the finance company obliged to accept your request to VT your vehicle. This is in line with 'bris' post above, but appears to be in conflict with the Consumer Credit Act. Furthermore, they were unable to refer me specifically to any clause within the Act that confimred this, nor were they able to explain why the formula in Section 100 of the Act and its example in the Appendinx to the Act bot allowed for calculating in arrears.

I imagine this is a case where the finance company are tasitly given the right to choose how they wish to interpret the law, and this also opens me up to the finance company refusing my VT and pursuing me for the arrears (and therefor removing my rights to VT) before I am able to raise the funds to pay the arrears payment.

Does anyone here have experinece of this? I cannot believe I am the first person to experience this bind, but I've read a lot of blogs and threads and cannot find any that deal with this issue. Does anyone have any legal experience on this?

[pirlgirl]

Re: Voluntary Termination

I also have questions about a vountary termination with British Credit Trust. They sent me a notice of termination, as I had missed some payments when my husband lost his job. I wrote to them stating I wanted to VT (within the time limit they had given me) but I stupidly didnt send it recorded delivery. I had no reply from them so sent 2 more VT letters by recorded delivery, but by this time was out of the stated time limit(just). After a phone call, I discovered they apparently sent letters for me to 'sign and return' to continue with the VT, which I never recieved. I was still getting letters saying they were terminating the contract. Eventually I got a letter from them confirming I was voluntary terminating and someone came and collected the car. Now I am recieving letters with repossession fees on and default sums notices. I have also recieved a letter stating I have an outstanding balance to pay. I have paid over 3/4 of the total amount of credit. Am I right in thinking with a VT, I pay the 50% figure stipulated on the credit agreement, plus any missed payments and any repair fees for the vehicle?

[Guest]

Re: Voluntary Termination

HI
DO you mean they sent you a default notice and then you terminated within the 14 days?

This is quite within your rights, you are also correct in saying that all you owe are any missed payments until and upto the termination of the contract.

Remind them that the car was terminated under section 99 and ask for a breackdown of any outstanding charges and post them up on here.

Peter

[pirlgirl]

Re: Voluntary Termination

Well, this is the confusing part! I did send my first VT within the time limit(14 days) but I didnt send it recorded and they are saying they havent recieved it. But I sent it twice more by recorded delivery but these were after the 14 days. I have got a letter from them stating I have voluntaty terminated the contract though, as I would not surrender the car until they did. I think they are still wanting the full credit amount. I will ask them for the breakdown of charges and get back to you. Thanks :tinysmile_grin_t:

[Guest]

Re: Voluntary Termination

sounds like you are OK you have to be careful in default situations

Finance Limited v Donnelly [2006] GCCR 5901

Peter

[pirlgirl]

Re: Voluntary Termination

Right I have a breakdown of sorts...

Total amount payable = £10,034.87
Less payments recieved = £8,072.87
Less vehicle sale procedes =£682
Balance Outstanding = £1,280

Balance comprises of the following Principle: £801.13
Charges: £188.87
Agents Fees: £240
Damages: £50
I am totally confused as full credit amount on agreement is £9556. 50% liability on agreement is £4778. On retrospective statement we have paid £7079. We owe them £656.87 for arrears and charges. Should I have a breakdown that reads like this instead,

Total amount payable = £4778
Less payments recieved =£7079
Plus Sums owed =£656.87
Plus Damages =£50

[Guest]

Re: Voluntary Termination

Right I have a breakdown of sorts...

Total amount payable = £10,034.87
Less payments recieved = £8,072.87
Less vehicle sale procedes =£682
Balance Outstanding = £1,280

Balance comprises of the following Principle: £801.13
Charges: £188.87
Agents Fees: £240
Damages: £50
I am totally confused as full credit amount on agreement is £9556. 50% liability on agreement is £4778. On retrospective statement we have paid £7079. We owe them £656.87 for arrears and charges. Should I have a breakdown that reads like this instead,

Total amount payable = £4778
Less payments recieved =£7079
Plus Sums owed =£656.87
Plus Damages =£50

Hi

If the agreement was teminated under 99/100 all you would owe would be the arrears on the account imediately before it went back, personally i would let them whistle for agents fees or damages.
You do not get anything back if you pay over one half but you still have to pay any installments you missed.

(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

Peter