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

[gravytrain]

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

As a matter of interest , how did it come about that you were £22 adrift seems like an oddly small amount on a payment of £300.

[gravytrain]

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

Oh you may have to pay the £22 if it brought forward arrears on the account.

[gravytrain]

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

No, no no
Ha ha , it doesn't work like that unfortunately.

Send them the VT letter earlier in the thread, all you owe are any missed payments up-to date. Recorded delivery two weeks notice and you require somewhere to leave the vehicle , unless they want to collect, keep a copy of ALL correspondence.

If they are saying that they terminated the agreement upon default for £22 then you want to see copies of the section 86 notice of arrears, and the section 87 notice and the termination notice. They cannot terminate under a contractual term and expect you to pay all the contractual charges.

If they still say you cant VT tell them you are prepared to argue the point in court. But make sure you get the written proof of your VT off.

[dingobingo]

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

Hi,

Yes, they're referring to a missed payment of £22 in May 2010. They said they then wrote to be saying they'd cancelled the agreement but would allow me to keep possession of the car and they'll continue to take payments. My monthly payments are £300 so they've received around £9600 since then.

Total borrowed £10,700
£1000 deposit
Total payable over five years: £17,817
Amount paid when default occurred: £3490
Total paid currently: £11,700

[gravytrain]

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

HI Just re read your post.
Am I right in thinking that they are referring to one missed payment in 2010 and you have kept up your payments since ?

If so this would not count as a default under the agreement as far as the CCA is concerned, can I ask how much you have paid off the agreement (including any deposit) and how much the total payable on it was.

[gravytrain]

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

HI
If they have issued a default notice under section 87 of the act and the time given for remedy(14 days) has passed they can terminate the agreement, and you loose the right to VT, unfortunately. If they haven't issued this statutory notice you can terminate it yourself under section 99.

You can still VT if you are within this period, but you have to ensure you have a cast iron paper trail, with dates letters etc. because they will try and say that you had not terminated the agreement.

[dingobingo]

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

HELP.

When I read the OP my heart lifted. My finance company have said that I can't do a VT as I had defaulted on a £22 payment in 2010. I read the rest of this thread and can someone clafify whether I have lost the right to a VT if I missed a default deadline? How can they cancel the agreement and continue to reap the benefits (monthly payments) when I've lost mine?

They're saying I can do a voluntary surrender instead which means I have to pay the difference between the auction revenue and the amount left to pay back.

Any advice guys n gals?

Thank you.

P.S Also the clause in their agreement that gives them the right to terminate mentions four other clauses, where if any are broken they can terminate if they wish. They refer to clause 1 in their default notice but clause 1 only mentions failure to pay INITIAL payments and makes no reference to regular monthly payments,

[gravytrain]

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

Keeping in mind that dealers do occasionally tell porkies, in order to get out of a VT

[gravytrain]

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

Peter,
Thank you for this thread!!!
I'm in a situation where I can no longer afford my car. I read your thread, called Black Horse finance to tell them I'd like to consider VT.
(I also remember the car dealer telling me that at ANY time payments were out of reach that I could hand the car back without achieving adverse credit.)
To my horror Black Horse said I don't qualify for VT as I have an "unregulated agreement"! They could only explain the difference between this type and a "regulated" agreement in as much that it pertained to the sum on the HP agreement, even though I'm almost up to the Fifty percent mark.
Is it correct that I cannot have a VT?

Regards
Bighag

By unregulated I presume they mean the agreement was entered into before 2008 and over 25K, or that the vehicle was used for business purposes ?

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

You cannot VT an unregulated agreement, sorry.

[bighag]

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

Peter,
Thank you for this thread!!!
I'm in a situation where I can no longer afford my car. I read your thread, called Black Horse finance to tell them I'd like to consider VT.
(I also remember the car dealer telling me that at ANY time payments were out of reach that I could hand the car back without achieving adverse credit.)
To my horror Black Horse said I don't qualify for VT as I have an "unregulated agreement"! They could only explain the difference between this type and a "regulated" agreement in as much that it pertained to the sum on the HP agreement, even though I'm almost up to the Fifty percent mark.
Is it correct that I cannot have a VT?

Regards
Bighag

[Portski]

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

Can anyone tell me if the Finance company can in enforce excess mileage charges if you hand the car back with a VT ?

[mercury-the-messenger]

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

came across this yesterday

http://www.motor.org.uk/magazine/art...ators-105.html

quote "
Cover Feature - Menace of the Terminators

Video Nasties are not normally associated with the reception lounges of car showrooms but one graphic production showing in auto supermarkets in the North of England has been alarming squeamish motor finance company managers.
The film in question spreads the word to consumers about how to voluntarily terminate hire-purchase agreements by returning keys to the lender and walking away once half of the borrowed amount on the car (including interest) is paid.
By actively spreading what one finance sector executive dubbed “the VT virus”, this video guide – aided by sales staff complicity – is encouraging the premature ending of finance deals which, according to latest figures, is costing lenders nearly £100m a year.
Enshrined in the 1974 Consumer Protection Act, the VT option was designed to protect borrowers from being forced to pay excessive HP repayments.
However, Phil Stone, managing director of Black Horse Motor Finance, points out that the legislation’s origins date back to 1938 with moves to combat unscrupulous cattle dealing. He says: “What was intended to avoid farmers being lumbered with high payments on three-legged cows is resulting in finance companies taking back what might as well be three-wheeled cars.”
Truncated HP agreements, which account for most VTs, cost finance firms an average of £1,500 per abandoned vehicle according to the Finance and Leasing Association.
Stone believes the problem was triggered by the reduction of new car prices after the “rip-off Britain” campaign four years ago. “Lower new vehicle prices and knock-on damaged residuals created the climate in which VTs thrive. Minimal deposits, high advances and longer-term repayment terms compound the problem. It is not surprising that some in the trade are complicit in encouraging VTs,” said Stone.
“They want to hit volume targets via shorter replacement cycles. So the prospect of a car’s depressed future value generating negative equity makes VT a quick fix to maintain turnover and hit manufacturers’ new car bonus targets. At the end of the day the customer is likely to struggle to find equity for the next deal. It is hardly likely to engender consumer loyalty.”
James Broadhead, sales and operations director for independent lender Close Motor Finance, which operates exclusively through retailers, says he understands dealers’ ambivalence towards VTs caused by pressure to “sell as many cars as often as possible using the cheapest monthly payments as the prime means”. But for lenders it means “carrying the can and picking up the tab and pain for a flawed system”.
Broadhead is relieved that players in the sector to date have not stretched repayments towards “suicidal” six or seven-year periods to protect or expand market share at any cost.
Running an operation that accounts for 20% of point of sale motor finance, Phil Stone acknowledges the irony that independent and dealer-dependent finance providers are the main victims of the VT trend. He says: “They are part of a move to counter High Street and direct lenders’ incursions into the market with unsecured personal loans, which of course are not liable to VTs.”
Black Horse intervened early in 2001 to limit the damage of early terminations. Proposed retailer deals are monitored with the central aim of avoiding negative equity. Stone explains: “We make the customer aware of the pitfalls, but avoid alienating, penalising, or leading them into mutually damaging temptation. Re-writing the agreement on a personal loan basis is usually the favoured option.”As a result, Black Horse’s annual multi-million pound VT losses now stand at one fifth of the figure racked up during 2001. Equally, the average VT penalty per car sustained by BH is around £1,100.
Black Horse’s below average VT “hit” is partially due to being part of a diverse group including Auto Lease and Dutton Forshaw that helps ease the pain of processing returned cars.
Stone endorses the unanimous finance sector view (endorsed by the SMMT and FLA) that the VT provision should be “abolished, abandoned and erased” from consumer protection legislation following Department of Trade and Industry consultations.
He says: “It is the only solution and the ’74 act works against lenders and the consumer in the long run. We have restrictive offerings at point of sale as a result. As long as the 50% rule applies and you have low or zero deposit and extended payment terms then VTs will plague us.
“We could be far more flexible and creative with our products. It extends to not being able to consider higher risk clients because there is no equity in the merchandise.”
From the standpoint of Close Motor Finance, James Broadhead commented: “We have not solved the problem, but in our company we have stopped it getting worse. Our average loss per VT is below the nominal average and overall we are losing 25% less compared to two years ago. This is because we took a stance against longer agreements and avoided the silly numbers game.
“Some people escalate agreements from 48 to 60 months and inevitably the depreciation curve and the repayment timetable come together to destroy any equity on the car.”
He finds that more vulnerable “value brands” suffer particularly badly from the VT trend due to lower front-end prices, poor residual values and longer repayment periods. Declining to name individual car makers he cites larger dealer groups in “certain regional areas” as the main proponents of contract termination.
With 5,000 dealers on its books, Close claims to have held its nerve by preaching the gospel of customer retention through educating the consumer about shorter payment periods protecting RVs and leaving consumers with something worthwhile to trade in. If retailers want to offer 60-month terms then a minimum 10% deposit is stipulated by Doncaster-based Close.
Broadhead suggests that the VT option may not be deleted but arguably revised with a 75% loaned figure repayment termination threshold. “You cannot go on for ever with VTs because ultimately you take customers out of the market,” he said.
John Watts, CAP’s senior forecast manager, paints a bleaker picture when he says: “If the vehicle goes to full term finance companies make a reasonable margin. But if it is voluntarily terminated any time after the cut off date they stand to lose more than they make out of interest.”
Watts is also product manager for CAPCalc, a piece of software that provides dealers with the projected value of a given model, based on the assumption that its owner will opt for VT. “The whole issue of voluntary termination is not something that consumers are that clued up about, compared with all their other rights,” said Watts. “Otherwise, the problem could be even worse.”Alain Favey, Citroen UK’s managing director and architect of the innovative “VAT free” offers initiative, is custodian of what is arguably a value brand referred to by James Broadhead. But he denies VTs are any more a problem for the twin chevron-badged cars than the rest of the industry. He describes the right to terminate as “just bizarre and a nonsense” while acknowledging that “sales pressures against equivalent cars lead them (salespeople) to do strange things”.


"

[sealives]

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

Dear Mr. Peterbard

I have been reading this post with interest, as I will be helping my potential son-in law, VT an HP agreement regulated by the CCA 1974.

If I may, I have 2 questions:

1) His agreement is in 2 parts, goods and services. In your post you state "If you pay less than £1500 per year on your agreement you must give 1 months notice" - is this just in relation to the goods, or the goods and services; the 'goods side' is £1482 per annum, the services side £968. I am trying to figure out how much notice to serve.

2) I believe he is not able to terminate the services side, and this will remain payable until completion. Presumably though, he can contact the various insurance companies involved, advise them to cancel the policies and ask for a rebate?; It's the AA in this scenario.

Thank you in advance for any help you are able to offer.

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

Excellent result - well done!