Fixed sum loan agreement regulated by the consumer credit act 1974

[nowheretoturn]

Hi,

I would like some advice regarding my Fixed sum loan agreement regulated by the consumer credit act 1974, which was obtained through my previous job (my local borough council) through an assisted purchase agreement. This was to buy a car as I was an essential car user in that role. Due to stress/depression, I was left with no alternative but to commence part time employment elsewhere. My salary has reduced significantly and I am unable to continue with my payments..as well as the insurance costs etc. After reading many articles on the internet, I first thought that I would be able to voluntarily terminate my agreement by handing the car back to the council, as I have paid 37 monthly payments of a possible 60, however, since further research I realised this was only possible if my agreement was an HP or conditional sale agreement.

My fixed sum loan agreement states that I am unable to sell the vehicle until I have paid the balance. Can anyone offer me advice regarding what my options are, if any?

Any help or assistance would be greatly appreciated.

thanks nowheretoturn

[gravytrain]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

Was the agreement secured by a bill of sale by any chance. Do you have a copy of the agreement.

[nowheretoturn]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

Hi Gravytrain,

Thanks for your reply.. I have attached my agreement below. If you require any further information to offer advice and guidance, just ask.

FIXED SUM LOAN AGREEMENT REGULATED BY THE CONSUMER CREDIT ACT 1974
This Agreement is made between ***************** Borough Council, the Creditor, of Town Hall, *********** and 'YOU' the person identified as the Borrower in the box below.
(1)Borrowers Name in Full: *********************
(2)Borrowers Full Postal Address: *********************************************

Amount of Loan:	£1 0,500.00
Plus Amount of existing indebtedness:	£0.00
Total Amount of Loan:	E10,500.00
Total Amount Payable:	£12,836.25
Duration of Agreement:	5 Yrs 0 Mnths
Payable by 59 payments of:	£213.94
Followed by 1 final payment of:	£213.79

Each instalment is payable each month on the day of the month on which the monthly salary due from ************ Borough Council to YOU is paid. Payments will be deducted from each monthly payment of salary, emoluments or allowances at source. By entering into this Agreement you authorise ******************* Borough Council to make such deductions and agree that this authority shall be irrevocable so long as any part of the Loan remains unpaid.

Commencing: 25/03/2010 APR 8.5% Fixed

KEY INFORMATION
If settled when 1/4 of the Term had passed: £8,262.77 If settled when 1/2 of the Term had passed: £5,784.75 If settled when 3/4 of the Term had passed: £3,040.01. These amounts are only an example as variations may occur if payments are not made on time or charges are added.

MISSING PAYMENTS: Missing payments could have severe consequences and make obtaining credit more difficult.
IMPORTANT - READ THIS CAREFULLY TO FIND OUT ABOUT YOUR RIGHTS
The Consumer Credit Act 1974 lays down certain requirements for your protection, which should have been complied with when this agreement was made. If they were not, the creditor cannot enforce this agreement without getting a court order.

The Act also gives you a^,number of rights:

Details of Vehicle for which loan is given: Registration Number: Make and Model: Cash Price: Inspection Fee: Total Cash Price Interest: Total Charge for Credit: HONDA CIVIC TYPE S £11,956.00 £0.00 £11,956.00 £2,336.25 £2,336.25

You can settle this agreement at any time by giving notice in writing and paying off the amount you owe under the agreement which may be reduced by a rebate. Examples indicating the amount you have to pay appear in the agreement. If you received unsatisfactory goods or services paid for under this agreement, you may have the right to sue the supplier, the creditor or both. If the contract is not fulfilled, perhaps because the supplier has gone out of business, you may still be able to sue the creditor.

This loan is based on a fixed annual interest rate of 4.45%. The interest is applied to the loan account when the loan_. is drawn and is fixed over the term of the loan. Payments made by YOU are allocated as follows: first to pay off any arrears, then to reduce the amount owed on the loan account, being apportioned over Principal and Interest as per the original payment allocation, then to any costs or expenses.
KEY INFORMATION:
Default charges: You may be charged -(1) £25 each time a payment due under the Agreement is not made on time, (2) £25 when a default notice is issued, to cover our expenses in enforcing this agreement, (3) Interest charges at the fixed rate of interest stated above, on any sum payable under this Agreement from Its due date to the date of actual payment.
There is no right to cancel this agreement under the Consumer Credit Act 1974.
Right to settle early: You have the right to repay the Loan before the end of the Term by making a single payment, where we will use a formula to calculate the amount of the Total Charge. Examples of early settlement charges are as follows (cant):

If you would like to know more about your rights under the Act, contact either your local Trading Standards Department or your nearest Citizen's Advice Bureau.
I have read and agree to the Terms and Conditions numbered 1 - 14 overleaf, which accompany and form part of this agreement.

This is a Credit Agreement regulated by the Consumer Credit Act 1974. Sign it only if you want to be legally bound by its Terms: Signature of Borrower:

Signature on behalf of the Lender::
Date of Lender's Signature:
(Date of agreement)

CONDITIONS
1. The Borrower must pay the installments set out overleaf on the dates specified
2. The borrower must not sell, assign, pledge as security to a third party, charge, hire, lend or part with possession of the motor vehicle without the previous consent in writing of ************* Borough Council while any sum is due and owing to ************ Borough Council under this Agreement.
3. The Borrower must use the vehicle in the performance of his or her official duties except when it is receiving necessary repairs or maintenance.
4. The Borrower shall ensure that the vehicle complies with the Motor Vehicles (Construction & Use) Regulations 1978, which are available for inspection at the office of the Head of Legal Services of ************* Council and shall generally keep the car in good repair and working order (reasonable wear and tear only expected).
5. The Borrower shall use the entire amount of the loan for the purpose of purchasing the vehicle to which this agreement relates and for no other purpose whatsoever. To verify that the loan has been used for this purpose the Borrower agrees that after purchase of the vehicle, and registration of the vehicle in the Borrower's name, the Borrower will produce to Revenue Collections (Car Loan Section) the original Registration Document/Certificate in DVLA forms V5, V5C (or any subsequent amendment thereof) which will be checked to ensure that the car details comply with the details given on this application form.
6. The Borrower must not enter into a Hire Purchase Agreement in respect of the vehicle to which this Agreement relates and shall not before or during the continuance of the Agreement with **************** Borough Council enter into an Agreement to borrow money from any source other than *************** Borough Council for the purpose of purchasing the vehicle to which this Agreement relates.
7. The Borrower must maintain a comprehensive policy of insurance in respect of the vehicle containing the following endorsement: "It is hereby declared and agreed that ************ Borough Council is interested in the motor vehicle insured under this policy and that the said motor vehicle is the subject of an Assisted Purchase Agreement made between *********** Borough Council of the one part and the Insured of the other and it is further declared and agreed that ************* Borough Council is interested in any monies which but for this endorsement would be payable to the insured under this policy in respect of the loss or damage to the said motor vehicle(which loss or damage is not made good by repair, reinstatement or replacement) and such monies shall be paid to *************** Borough Council as long as they are interested in the vehicle and their receipt shall be a full and final discharge to the Company in respect of such loss or damage. Save as by this endorsement expressly agreed nothing herein shall modify or affect the rights or liabilities of the Insured or the Company respectively under or in connection with this policy or any condition or term thereof".
The said policy of insurance shall provide insurance cover in relation to the vehicle for a sum not less than the market value thereof and if requested the Borrower shall submit such policy with the current premium receipt to *************** Borough Council whenever required to do so,
8, The Borrower shall be solely responsible for the motor vehicle and any accident Of injury arising to himself/ herself or third parties by reason of the use of the car and will indemnify ************ Borough Council from and against all proceedings costs claims demands or liability whatsoever in respect of any claim howsoever arising or through any default in repayment of the loan or through the breach or non performance of any terms or conditions of the Agreement.
9. If before the whole of the loan and interest thereon has been paid to ************** Borough Council by the Borrower the Borrower' shall
a) die or
b) cease to serve or be employed by ***************** Borough Council for any reason whatsoever or
c) fail to observe any of the terms of the Agreement or
d) cease to be required by ************** Borough Council to provide a motor vehicle for the better performance of his or her duties or
e) sell, assign, lend, pledge or charge the motor vehicle or part with its possession or
f) fail to insure the motor vehicle or keep the same insured as previously provided or
g) commit any act of bankruptcy or make any composition or arrangement with his or her creditors or
h) commit any act resulting in the seizure of the motor vehicle whether by way of execution distress or otherwise
This Agreement may be terminated and the balance of the loan and interest then outstanding shall immediately upon the expiration of the Default
Notice or Termination and Enforcement Notice served on the Borrower in accordance with the Consumer Credit Act 1974 become payable to ************** Borough Council or his /her personal representative,
10. The Borrower authorises **************** Borough Council to deduct, where lawfully permitted to do so, any balance of the loan outstanding under this Agreement from any redundancy or other payment of any kind due to the Borrower (including final payment of salary) in the event of the Borrower resigning from his/her employment or being made redundant or otherwise dismissed
11. The borrower may, by giving not less than one month's notice in writing to *********** Council, pay off the outstanding balance be for the
expiration of the loan period. If the Borrower prematurely repays the loan the sum repayable shall be calculated using the Rebate Formula as regulated by the Consumer Credit Act 1974.
12. When the Loan is settled early ************ Borough Council is entitled to defer the settlement date pursuant to the consumer Credit (rebate on Early Settlement) Regulations 1983 when calculating any rebate, which may be due to the Borrower or his/her personal representative.
13, The Borrower acknowledges that this loan is made in the context of his/her relationship with ************ Borough Council as an employee and that this is an exempt agreement as set out in schedule 1(a) of The Unfair Terms in Consumer Contracts Regulations 1994
14. This Agreement supersedes all previous Car Loan Agreements between the Borrower and ***************** Borough Council.

Many thanks

[CleverClogs]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

KEY INFORMATION:
Default charges: You may be charged -(1) £25 each time a payment due under the Agreement is not made on time, (2) £25 when a default notice is issued, to cover our expenses in enforcing this agreement,

Wrong.

See s 86 E (6) of the Consumer Credit Act 1974 as amended - link

It may also be defective in other ways which may be more significant. Some of the clauses seem more redolent of a HP agreement.

[nowheretoturn]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

Hi Cleverclogs,

Thanks for your reply, I totally agree with what you stated with regards to the similarities to a HP agreement, without the perks of terminating the agreement. It appears to me (who is very naive and not clued up on such matters, hence looking for advice!) that I do not have a leg to stand on..


Nowheretoturn

[gravytrain]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

Erm yes talk about catch 22.

You are right it is not applicable for a section 99 voluntary termination as it is not a HP agreement.

It is a fixed sum restricted use agreement.

Have you contacted them and told them that you will not be able to afford the repayments ?

It is at least arguable that the contract became terminated upon you leaving the company.
However they cannot demand full payment until they have served a default notice, personally i doubt that any judge would enforce the agreement when you were restricted from remedying it by selling the car.

The best way our of this is by mutual consent. I would decide if you want to keep the car or not, you could ring them and make them an offer of a reduced payment, if they do not want to accept this they can either release the car to you and let you sell it, or accept return of the vehicle and you can then argue over what is owed.

When you find out what they say get back and we will advise of possible options.

[gravytrain]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

Clever Cloggs is mistaken regarding the charges unfortunately the sections indicated refer to statutory default notices not notices issued under the contract, these may be challenged as being unfair however.
But this is not really relevant to your problem anyway.

Sorry CC

[nowheretoturn]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

Thanks Gravytrain, I will contact them first thing Monday. However, I discussed the possibility of reducing payments prior to leaving the council's employment and they were extremely unhelpful. They were merely insisting that I have entered into a legal agreement.. so they were very helpful indeed!

[gravytrain]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

Thanks Gravytrain, I will contact them first thing Monday. However, I discussed the possibility of reducing payments prior to leaving the council's employment and they were extremely unhelpful. They were merely insisting that I have entered into a legal agreement.. so they were very helpful indeed!

YOu can afford to be a little harder with them i think.

The agreement is no longer binding on either party as far as I can see, not to say that the liabilities aren't of course, and they still have to be discharged.

The way they are discharged should be negotiable, if they want to issue a default notice and try and enforce the agreement under the act, I should tell them to get on with it. If they do start issuing notices of arrears or default notices tell them that you will be applying to the court for a time order in order to repay over a longer period.

But of course you would sooner settle amicably.

they cannot have their cake and eat it.

[nowheretoturn]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

Hi Gravytrain,

Sorry it has taken me a while to get back to you. I contacted my ex employer via email so I would have a record of my request/query. I have copied and pasted my email and their response which I received today... Advice would be greatly appreciated...

Hi Eileen/Julie/Steve/Helen,

Sorry I have taken a while to get back in touch. The reason for this is due to the fact that I have been waiting to hear back from the British Gas Energy Trust with regards to a grant for assistance to file for bankruptcy. However, my application for the grant has not been successful at this time, and as such I have arranged to have a meeting with Christians Against Poverty when I will receive debt advice with a possibility of a solution. This has been scheduled at the earliest opportunity which is 16.05.13.


As you may be aware I have now ceased employment with ************* Council due to depression/anxiety. I have since commenced employment part time in the NHS, which pays band 2 salary, pro-rata at 22.5 hours per week. At this moment in time I cannot foresee a way out of my predicament. I would therefore request that I can either hand the car back with the outstanding balance payable to yourselves by way of a payment plan or that you authorise the release of my car so I can sell my car privately, which in turn would pay most, if not all of the balance owing.


I previously would have liked to have suggested lower payments being made from myself, however, I now know that this is not feasible.


Regards,

Their response, received today.


Hello Andrea

I have been taking advice on your case and the best way forward for all parties is for the vehicle to be sold to repay the loan.

We would only agree to you selling the vehicle to a dealership who agrees to pay ************* Council directly. I would liaise with them and agree to release the HPI once they have paid the monies directly to the Council, alternatively you can agree that the vehicle is transferred by consent to MBC , who would then sell the vehicle by auction, any monies received would reduce the amount outstanding and we could make an arrangement for you to repay the shortfall.

Your full balance is £5,134.41 and your current Early Resettlement figure, valid until 30-04-2013 , is £4,839.26.

If you wish to discuss this further you are welcome to contact me after 22-04-2013 as I am not in work on Monday.

Regards Eileen

[gravytrain]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

HI

Do you know the current book value of the car ?

I have checked the early settlement figure and I get it to 4805 which is near enough.

The agreement is terminated so be careful when you make arrangements to repay any shortfall, I don't think they should be charging you anymore interest.

Make sure the terms are over a long enough period for you to be able to afford them comfortably.

Alternatively you could try raising some casj and making them a smaller offer, they may accept just to see the end of the situation.

Good luck

[nowheretoturn]

Re: Fixed sum loan agreement regulated by the consumer credit act 1974

Hi gravytrain,

Thought I would give you an update. The Borough Council who I used to work for have now agreed to let me hand the car back to their fleet services, however, a valuation on the car still needs to be made so they can make an offer of a price they are willing to give me for the car. Of course, I wont actually be receiving any of the monies that is agreed, this will be paid straight to the council and I will be liable for what is owed.. but hopefully at an agreeable payment plan which will suit both parties involved.

Sadly, I cannot believe this has taken so long and to still not have an appointment to take the car in for valuation as I am sure even when they have made an offer, the paperwork will take ages.. if anything up to now is anything to go by! But, on a positive note at least they are going to let me hand the car back, I just wish it was all sorted by now.

Many thanks for all the help and support.

Nowheretoturn :beagle: