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

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

Very useful. This part of the CCA is so frequently misunderstood, yet when explained clearly, for someone in financial difficulties it can save them literally thousands of pounds. :beagle:

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

HI
I thought I would have a look at section 100 of the act. This is the one that says what is due when a debtor terminates a conditional sale or HP agreement.
“(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.”

The language used is, to most of us impenetrably convoluted, what Francis Beniun calls highly compressed statutory language (well he would wouldn’t he).
I should mention that it is not necessary to understand any of this to use the voluntary termination aspect of the act.
The section limits the liability of the debtor to 50% of the total amount due under the contract, this is in contrast to the sum that would normally be payable on a debtors termination of an agreement (100%)
The first thing to note about section 100 is that it is a separate section to the actual termination clause(section 99) this sum is due on termination but it is not part of the termination, the debtor need not pay it in order to terminate.
The section has its origin in the hire purchase act 1965, where it is worded slightly differently.
“(5) In section 4(1) of the principal Act there shall be inserted the words " Provided that, if the court is satisfied in any action that a sum less than the amount by which one-half of the hire-purchase price exceeds the total of the sums paid and the sums due in respect of the hire-purchase price immediately before the termination would be equal to the loss sustained by the owner in consequence of the termination of the agreement by the hirer, the court may make an order for the payment of that sum in lieu of that amount ".
Notice it talks about the court making an order rather than the sum being due on termination, this again confirms the point that this is a charge post termination, or for sums liable under the terminated contract if you like.
The calculations of sums due under the section are made using three quantities.
Q1 Half the total amount payable on the agreement
Q2 The aggregate or sum of all payments made on the contract (part exchange allowance, deposit, all repayments)
Q3 All the monthly payments that were due by the termination date, but not made.
Ignoring the last quantity for a minute we see that the section says that the amount payable by the debtor is the difference between Q2 and Q1 (if any). The reason it is worded like this is to dispel any conception that a rebate would be due to the debtor should Q2 exceed Q1.
This is a crafty bit of customer protection in my opinion. If the creditor has made a fair deal, the value of the vehicle when it is returned will offset his losses under the agreement, of course if he sold he customer a lemon and hyped up the credit then the resale value will go nowhere near.
Consider an agreement for 12 months that hits the half way value Q1=Q2 at six months into the contract nothing is due, now consider that the debtor keeps the car for another month before terminating, Q1 will still equal Q2 but he would have had the vehicle for an extra month. This is also a hire agreement the extra month is worth one payment=Q3, this is added to the total owed.(Q1-Q2)+Q3
Peter
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i am now confused

so what about the 50 % termination figure written into the HP agreement to exercise your right to terminate and owe nothing

on the agreement it states this figure

i have had quite a few HP agreements in my time and i talk of experience on doing a VT


1) Contrary to popular belief, the debtor is fully entitled to terminate the agreement at any time. It does not matter if he is in arrears or if he has paid half of the total amount on the contract.

WHAT IF THE DEBTOR HAS NOT PAID HALF, THE DEBTOR WILL HAVE TO FIND ANY SHORTFALL

Yes

Peter

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

i think the main thing here is that if you have paid less than half and do a VT, the creditor can try to reclaim monies owing, but the debtor can treat them as any other credit debt and so, for example in a DMP, money would be apportioned pro rata from disposable income.

This can make a big difference to some people, rather than waiting for the creditor to terminate the agreement when they can be left far worse off.

[miliitant]

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

i totally agree with what you say

thats how i see it

dont know where the confusion my end came from

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

If you decide to terminate your agreement voluntarily and hand back the goods to the creditor, you should only have to pay up to half of the total amount payable under the agreement, minus sums that you have paid and sums that are due. Sums that you have paid include any deposit plus the instalments that you have paid: sums due are any arrears/missed payments due at the time of termination.
The one half or 50% figure is stated on the agreement in the box headed "Termination: Your Rights".
You will then also owe any arrears (missed payments) plus damages if you have failed to take reasonable care of the goods (over and above normal wear and tear).

[miliitant]

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

100. — (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.

[miliitant]

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

i am now confused

so what about the 50 % termination figure written into the HP agreement to exercise your right to terminate and owe nothing

on the agreement it states this figure

i have had quite a few HP agreements in my time and i talk of experience on doing a VT


1) Contrary to popular belief, the debtor is fully entitled to terminate the agreement at any time. It does not matter if he is in arrears or if he has paid half of the total amount on the contract.

WHAT IF THE DEBTOR HAS NOT PAID HALF, THE DEBTOR WILL HAVE TO FIND ANY SHORTFALL

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

it is my understanding that a debtor can infact voluntary terminate the agreement at any time.

to walk away owing nothing, the 50 % mark must have been met on the agreement. that termination figure will be on the agreement

See Number 1 in Post 1

[miliitant]

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

it is my understanding that a debtor can infact voluntary terminate the agreement at any time.

to walk away owing nothing, the 50 % mark must have been met on the agreement. that termination figure will be on the agreement