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

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.

[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

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.

[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

[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.

[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.

[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

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

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

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.

[Purviem1]

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

Hi,

Just wondering if anyone has had any experience with Renault? My husband is getting a work car now so we have no need for his car, also we will have nowhere to keep it. Only a 2 car driveway and parking on the street on our estate is difficult to say the least. We have pretty much paid bang on half, but we are over milage by 10,000 miles. Our intention was to keep the car at the end of the term so we weren't too worried about miles at start. It is in generally good condition, it will be due an mot in June I think and I can tell the brakes will probably need doing. We are about 5 or 6 months late with the most recent service as we've just had so much going on. I would get it serviced before putting VT in action. Do.you think that would class as not taking reasonable care if it's late on a service? Also would they try to charge us for brakes or is that just wear and terse being it is within its mot?

[ben2004]

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

I'm in the same position.
I'm wondering whether or not to sign this 'SECTION A' form they've sent me or not.

I've taken my car to a bodyshop recently, paid £240 to have scrapes, scratches and minor marks fixed, my car's bodywork is basically spotless now, minus a slight scuff on the alloy which couldn't really be sorted out.

Black horse did tell me that I DIDN'T have to get the bodywork done as they thought it'd come under fair wear and tear, but I thought to myself... F*** that! I'd rather spend a couple of hundred on getting the work done rather than potentially risk paying huge auction house fee's.

Anyway, i'm getting ready to ring them to make my final payment before i'm at the 50% point and arrange this VT. I need it done and dusted within the next 2 weeks

[kevpuk]

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

Hi to All - N00b here looking at VT as a possible option.....hopefully you can provide some clarity on my numbers?

So, I am circa. 28 months in to a 36 month PCP and thinking of changing cars - problem is, there is an approx. £4k shortfall between settlement figure and p/ex valuations. Some of this is due to me exceeding mileage, but not all. My question is really around exactly what the 50% number is, in relation to VT - I am a little confused around 50% of what, exactly, i.e. does it include my deposit, deposit contribution, finance charges, finance fees etc., so here is a breakdown of my numbers:

Total Cash Price of Vehicle: £47,324.86
Deposit : £7,601.57
Total Charge for Credit: £5,085.95 (interest = £4,810.95, acceptance fee = £180.00, Purchase Activation Fee = £95.00)The 'Adequate Explanations' finance paperwork has a box called Total Amount Payable with a value of £52,410.81. In the agreement details, under the 'Termination: Your Rights' section, the figure quoted is £26,205.41 which is half of the £52,410.81....

To date, I have made payments at £589.75/month, so £16,513 over 28 payments, with 8 payments to go(?) to reach 36 months. This will make the total payments £21,231 (36*£589.75) suggesting that I never get to 50%?! So, assuming the deposit (deposit contribution?) are to be factored in - I am a little confused......I paid £4,000 of the deposit, the other £3,601~ was 'deposit contribution' if that is relevant.

Please help

[Paul1964]

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

Thanks to the help on this site I voluntarily terminated my vehicle a few weeks ago.

Mercedes want to charge me nearly £400 for pre-rata excess mileage.

I sent the follow up letter from this site and they came back with the following.... Are they right or just trying it on. What should I do next?



Thank you for taking the time to raise your concerns with our Customer Services department following the receipt of your invoice for excess mileage.

I was disappointed to read you have been left feeling aggrieved by the charge raised. Please be assured, it is never our intention to cause any distress or aggravation to our customers during their journey with us and I apologise if this has not been the case in this instance.

Whether you are returning your car at the end of your agreement or upon use of the Voluntary Termination (VT) clause, as you have not exercised your right to purchase the car, an excess mileage charge will be raised should your return mileage exceed your total mileage allowance. This obligation is set out within the first page of your agreement, under key information. The provisions of the Consumer Credit Act that cover a customer’s right to VT their agreement do permit us to include any over mileage when determining what is 'not reasonable' upon the cars return. It is stated in your agreement under ‘Excess Distance’; ‘If the vehicle is returned to us (whether at the end of the period hire or an earlier termination), we will calculate the total distance travelled by the vehicle whilst in your possession (the “Total Distance”)’.

Your mileage allowance has therefore been re-calculated on a pro-rata basis in line with the length of time you have had the vehicle in your possession. Please find below a breakdown of your excess mileage calculation for your reference:

Original Allowance: 48,000 miles
Term of agreement: 48 months
Terminated early by: 5 months
Revised allowance: 43,000 miles (1,000 miles x 43 months)
Collection miles: 45,958 miles
Exceeded by: 2,958 miles
Pence per mile: 10 pence plus VAT
Total: £354.96

I would also like to kindly refer you to S99 (2) Consumer Credit Act 1974 where it states:

‘Termination of an agreement under S (1) does not affect any liability under the agreement which has accrued before the termination.’

As your agreement was subject to a mileage allowance prior to termination and you have exceeded the allowance of 43,000 miles, the charge has been raised correctly and remains payable.

Whilst this may not be the response you had hoped for, I trust the above has provided you with the reassurance that I have fully investigated your concerns. Please also be assured that your complaint has been investigated in line with our obligation to treat our customers fairly.

May I kindly ask you accept this as our final response, however, should you be at all unhappy with our handling of your complaint you have the right to refer your complaint to the Financial Ombudsman Service, free of charge – but you must do so within six months of the date of this response. If you do not refer your complaint in time, the Ombudsman will not have our permission to consider your complaint and so will only be able to do so in very limited circumstances. For example, if the Ombudsman believes that the delay was as a result of exceptional circumstances. The Ombudsman contact details are Exchange Tower, Harbour Exchange Square, London, E14 9SR tel:- 0800 023 4 567 or 0300 123 9 123, website www.financial-ombudsman.org.uk.

[Bigley]

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

Hi.

In September 14 I purchased a car on finance. April 17, bought a new car and called to have VT quote sent to me. I had paid 50% + and had to pay £100 for collection....

After delays (not bein booked in) finally got the quote and someone came out to inspect my car. It was agreed it was in a good state and the small scuff on back bumper was down to fair wear and tear, happy about this, ive signed, dad signed and the guy signed to confirm this.

now RMS receivables are huntig me down for around £180 even though they have sold the car on immediately. I have checked the car, it was taxed early June.

What rights do i have? I have not yet responded as i do not think this is fair to try charge me for this after messing me around (The dealership also messed me around) and having a full tank of fuel in the car upon collection!

Help, please!
i'm only 22 and would not want this affecting my credit score etc. For when i want to fly the nest and have a mortage.