Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

[R0b]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Purely from a legal perspective, there is no obligation to return the car or pay for collection - once you terminate you become what is known as an involuntary bailee meaning you have possession of the car involuntarily and your only obligations is to ensure that the car is in a reasonable condition until removed from your possession - therefore you can insist that Blackhorse collect without charge (though they may chase you for these sums at a later date) or you can deliver the car, but I usually caveat that with the lender agreeing to reaosnable expenses incurred.

If you want to deliver free of charge that is also fine, which option suits you best.

[eternal_pessimist_1966]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Thanks Rob.
Going to take the car to auction house as they want £75 to collect.

[R0b]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

termination of the agreement takes effect as soon as you give notice to Blackhorse, it is not conditional upon you signing their VT document nor are you legally obliged to do so.

If they refuse to collect the car, there are ways to ramp up the pressure to make sure it is collected. One thing I would recommend which I haven't in the past would be to take copies or photos of the service history and any repairs or work carried out as evidence of the car being in a reasonable condition.

If you are going to deliver the car, If you want to be safe you could probably draft a one page acknowledgement slip for them to sign so you can prove it was delivered on that particular day. Something along the lines of the undersigned acknowledges receipt of the goods and then set out the vehicle make, model, registration, and the date along with a signature line and printed name line.

[eternal_pessimist_1966]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Hi.
Recently rang Black Horse and requested VT.
They have sent a letter asking to sign and return stating we will deliver to an auction, await collection etc and also advising we may be liable for additional liability if not taken care of the vehicle.
I assume this means the VT request is on their system.
Obviously, there is lots of information on this forum stating DO NOT SIGN ANYTHING.
We will not sign, but can someone confirm we can just arrange delivery at the auction house or do we need to send them a VT in writing as well ?
Thanks,
EP_1966

[R0b]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Ok that's great @R0b

How do I get the ball rolling in terms of starting the process of a VT

One more thing sorry rob , can the finance company charge me interest on any balance I may have left ?

Thanks

Lee

http://www.legalbeagles.info/forums/...on-Your-rights

The link above provides some sample letters at the bottom, there is one for termination and adapt to suit your position.

They can't charge you interest no, only a court may order interest if they issued proceedings and you failed to pay up.

[AJC]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Without seeing the contract in full, I am only speculating based on agreements I've seen previously. The title of the agreement is irrelevant these days because there are now a number of agreements that fall under the HP umbrella, but if your contract refers to a GFV then it would almost certainly be a PCP type agreement.

The VT calculation will always remain the same which will be 50% of the total amount payable. Now if you paid a deposit then that will contribute towards the 50% but I am also guessing the APR will also be a factor which will determine at what month you are able to VT.

PCP agreements are great for those who want to be able to afford new cars with low monthly repayments, but is at a disadvantage if you want to VT at some future date. Equally, a conditional sale or true HP agreement will have the opposite effect in that there is a tendency that the instalments are higher meaning the balloon payment is usually a nominal amount and if you want to VT for whatever reason, you will have paid more of the car than you would of a PCP agreement so that right becomes available a lot sooner.

Just a word of warning, if you are looking to sell the car then you may want to be a bit careful because there is generally a clause which restricts the selling of the car and in doing so (should the lender become aware) that would be treated as a fundamental breach of contract enabling the lender to pursue the total amount payable under the agreement.

[MENTION=71570]R0b[/MENTION] thank you for your clarification.

We have already spoken with the finance company who are happy for an early settlement and the figure quoted naturally includes the GFV. This is where the shortfall is apparent (approx. £4k) hence the reason for the enquiry.

Thanks again.

[lee7]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Ok that's great [MENTION=71570]R0b[/MENTION]

How do I get the ball rolling in terms of starting the process of a VT

One more thing sorry rob , can the finance company charge me interest on any balance I may have left ?

Thanks

Lee

[R0b]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Without seeing the contract in full, I am only speculating based on agreements I've seen previously. The title of the agreement is irrelevant these days because there are now a number of agreements that fall under the HP umbrella, but if your contract refers to a GFV then it would almost certainly be a PCP type agreement.

The VT calculation will always remain the same which will be 50% of the total amount payable. Now if you paid a deposit then that will contribute towards the 50% but I am also guessing the APR will also be a factor which will determine at what month you are able to VT.

PCP agreements are great for those who want to be able to afford new cars with low monthly repayments, but is at a disadvantage if you want to VT at some future date. Equally, a conditional sale or true HP agreement will have the opposite effect in that there is a tendency that the instalments are higher meaning the balloon payment is usually a nominal amount and if you want to VT for whatever reason, you will have paid more of the car than you would of a PCP agreement so that right becomes available a lot sooner.

Just a word of warning, if you are looking to sell the car then you may want to be a bit careful because there is generally a clause which restricts the selling of the car and in doing so (should the lender become aware) that would be treated as a fundamental breach of contract enabling the lender to pursue the total amount payable under the agreement.

[AJC]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Hello AJC,

It does not take into account the guaranteed future value of the car, it would only take into account what you have paid to date under the instalments and any deposit. It sounds like it is a PCP agreement, where you only pay off the depreciation of the car rather unlike a true HP agreement where the depreciation and the value of the car is deducted, hence you can generally VT around the halfway mark under a true HP agreement or perhaps a conditional sale agreement.

That being said, the purpose of the PCP is that at the end of the agreement, the car should be guaranteed that value, if it is not then potentially it is a breach of contract on part of the lender. However there would no doubt be a number of factors to be taken into account e.g. the current condition of the car and the mileage of it. Does the contract specify a definition of GFV?

If you terminated now, from what I understand you will have to owe some money, unless you can prove the GFV of the car was unrealistic which may be difficult. You could perhaps argue with the lender and see if they will retake the car back but again, you have to take into account the above factors mentioned.

@R0b Thank you for your quick reply and for such an informative thread.

The contract is a Hire Purchase Agreement (Regulated) and has a Termination clause that reads as follows: "You have a right to end this agreement. To do so, you should write to the person you make your payments to. They will then be entitled to the return of the goods and to half the total amount payable under this agreement, that is £12,435.77. If you have already paid at least this amount plus any overdue instalments and have taken reasonable care of the goods, you will not have to pay any more."

However, I agree with you that the contract is more like a PCP and indeed we are only bound to pay off the perceived depreciation plus interest. However, the termination calculation is clearly 50% of the total amount and not 50% of the depreciation (plus interest) as might have been expected? If we let the contract run it's course we will have paid a total of £15,155.04 and then obviously have the option of handing the car back with nothing further left owing. Therefore, to satisfy their calculated 50% rule our exit date is much closer to the end of term rather than halfway through as might be expected?

Ignoring the interest for one moment, the car's value at purchase was £20,000, has a GFV of £7,607.50 and consequently a depreciation of £12,392.50 to repay over 4yrs. Two years in and the settlement figure is approx. £13,500 so we're repaying both capital and interest at the same rate, which is good and as advertised. Indeed considering the car's true value at present is considerably less than is owing, it would seem that the GFV is optimistic and there is unlikely to be any residual equity at the end of term.

Just keen to establish our rights and consequences of any chosen action.

In the meantime we will endeavour to sell the car privately and try and recover as much of the shortfall as this is our preferred option if possible.

[R0b]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Hi,

We're considering a VT from a HP agreement with a private finance company.

The original total amount payable was £24,871.54 over a 4yr period. When calculating the 50% termination figure of £12,435.77 does it take into account the guaranteed future value of £7,607.50?

If it doesn't then by the time we will have repaid £12,435.77 we will only have a few months left to run and surely the point of VT is to end early?? We have looked into trading the car in but there is a shortfall of over £4.5k and selling privately has to date only brought trade enquiries offering a similar figure.

We've currently repaid over £7,500 in monthly payments, which adding the GFV is a total of over £15,000.

Are we within our rights to terminate now and hand the vehicle back with no further payments?

Thanks in advance.

Hello AJC,

It does not take into account the guaranteed future value of the car, it would only take into account what you have paid to date under the instalments and any deposit. It sounds like it is a PCP agreement, where you only pay off the depreciation of the car rather unlike a true HP agreement where the depreciation and the value of the car is deducted, hence you can generally VT around the halfway mark under a true HP agreement or perhaps a conditional sale agreement.

That being said, the purpose of the PCP is that at the end of the agreement, the car should be guaranteed that value, if it is not then potentially it is a breach of contract on part of the lender. However there would no doubt be a number of factors to be taken into account e.g. the current condition of the car and the mileage of it. Does the contract specify a definition of GFV?

If you terminated now, from what I understand you will have to owe some money, unless you can prove the GFV of the car was unrealistic which may be difficult. You could perhaps argue with the lender and see if they will retake the car back but again, you have to take into account the above factors mentioned.

[R0b]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

If you VT the agreement then you are correct in that is how much you would owe under the agreement. However if the lender terminated the agreement then the following is an example of how it would be calculated - the figures are examples only.

Total amount payable= £14,632
LESS

Total paid to date = £3,558.75
Proceeds of Sale = £3,000
Option to purchase price = £1,500
Interest rebate on remaining months left immediately before termination = £475.00

Total amount outstanding to pay = £6,098.25

As you can see, your liability is likely to be much less if you VT rather than allow them to terminate the agreement themselves. If you do VT then the lender should have an obligation under the FCA rules to assist you and allow you to come up with a reasonable repayment plan. You should offer a reasonable sum of money you can afford based on your income and expenditure and taking into account your living circumstances. If the lender refuses to accept the repayment plan, you could make a formal complaint to them and if they do not uphold your complaint you could take it further to the Financial Ombudsman. They will look at what is fair and reasonable taking into account the circumstances, if the Ombudsman then upholds your complaint and you accept it, then it's legally binding.

[lee7]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Hi [MENTION=71570]R0b[/MENTION] I'm a bit confused so I will post all the figures and see what you can make off it if you wouldn't mind

Total amount - £14,632 (50% £7,316)
Amount paid - £3,558.75

So would that amount Iv already paid come off the half figure (£7,316) leaving me a shortfall off £3,757 ?

Can they and would they demand payments of this money even if I couldn't afford it ? Is there a minimum they would except on a monthly basis ?

Thanks

Lee

[R0b]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Lee you can VT even if you receive a default letter, but if you fail to pay up or VT before the date stated in your letter you will probably lose the right to VT. This is because once the lender has terminated the agreement, you cannot VT.

If the lender does terminate before you VT, then you will owe the full balance of the agreement less:

- the total sums paid to date
- the proceeds of sale from the car
- option to purchase price
- a discount for the acceleration of payment to the lender, usually represented by the statutory rebate of interest

[lee7]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Thanks again for the reply [MENTION=71570]R0b[/MENTION]

So to clarify I would still have to pay roughly 5k (50% off the amount left) and the sale of the car would not be deducted from this 5k ?

And I would need to do this before I get a default notice ? If I get a default and lose the right to VT would I have to pay all the 10k back and would the sale of the car not be deducted from that ?

Thanks

Lee

[AJC]

Re: Voluntary Termination of a Hire purchase or conditional loan under the CCA 1974

Hi,

We're considering a VT from a HP agreement with a private finance company.

The original total amount payable was £24,871.54 over a 4yr period. When calculating the 50% termination figure of £12,435.77 does it take into account the guaranteed future value of £7,607.50?

If it doesn't then by the time we will have repaid £12,435.77 we will only have a few months left to run and surely the point of VT is to end early?? We have looked into trading the car in but there is a shortfall of over £4.5k and selling privately has to date only brought trade enquiries offering a similar figure.

We've currently repaid over £7,500 in monthly payments, which adding the GFV is a total of over £15,000.

Are we within our rights to terminate now and hand the vehicle back with no further payments?

Thanks in advance.