Voluntary Termination of Car Finance

[DJ-1988]

Hi Guys,

Have been using these forums as resource for information on how to VT my car finance, and can I say what a brilliant resource it is. However, I am now stuck and unsure on what to do next

I have paid over half of the agreement and have sent an email to the finance company (PFS), to request information on how to voluntarily terminate the agreement. I had a letter back with how much I have left to owe to reach 50% (which was £0). They also wanted me to fill in, sign and return a document to them. I think this form was basically asking me to sign my rights away so that they could charge me for excess mileage pro rata (which I understand the CCA supercedes, and as long as I haven't gone over it by a super amount should still be acceptable under fair wear and tear). My mileage was stated as 10,000 per year for 3 years in the agreement, the agreement runs until end of January and the mileage has just hit the 30,000 mark.

I sent a letter back stating I didn't want to sign the form so please accept this letter as me stating that I want to VT the agreement and asking them to contact me with when they wanted to pick up the vehicle, or alternatively let me know where I need to drop it off. I have just received a reply letter, which is basically a carbon copy of the first letter they sent me, with a form that they want me to fill in, sign and return.

Do I just send them a letter back stating that I am not going to fill in or sign the form, so take my previous letter as the notice that I want to VT the agreement? If not, what is the best way to proceed?

Many thanks in advance,

DJ-1988

[ostell]

Re: Voluntary Termination of Car Finance

You write again telling them that you have VT'ed the agreement. Give them a reasonable deadline to pick up the car and after that you will be charging for storage at £10(?) per day. You will also inform the DVLA that you are no longer the owner and hence they will be liable for penalties for lack of tax and insurance.

Don't sign the form and make sure that you have multiple photographs of the car showing the pristine condition it is in. Include a picture of a current newspaper in at least one of the photos. Then they may be willing to negotiate to your satisfaction.

[DJ-1988]

Re: Voluntary Termination of Car Finance

Thanks for the reply.

I decided to email them again (as well as sending out a letter) stating this and got the following response:

Thank you for your email. Unfortunately, we cannot arrange the termination unless you sign and return the form sent to you agreeing to the process. Please return this as soon as possible so we can arrange this for you.

Do they have to accept my initial notice (sent on 8th September) as my 14 days notice or can they argue that as I haven't adhered to signing and returning their form?

I sent them an email back stating that I do not have to sign or fill anything in other than the notice letter (sent on the 8th) and the condition report when the vehicle is collected. Is that correct?

Also, can I cancel my DD now? payment is due to come out on the 28th of each month, so I have got my notice in well within the timeframe?

Cheers,

DJ-1988

[DJ-1988]

Re: Voluntary Termination of Car Finance

Just been on the phone to them. After arguing with the main call centre woman, she passed me onto the manager who confirmed that I was right and didn't need to fill in the form, sign and return. So she is passing my details onto the collectors who will be in touch.

Does this mean that I have voluntarily terminated my agreement now? Can I cancel my DD so they can't take any more money out?

Cheers,

DJ-1988

[judgemental24]

Re: Voluntary Termination of Car Finance

Phone this manager again and ask him to send you an email as confirmation the finance agreement has now been voluntary terminated

My own views on this will be that the agreement will end when they take possession of the vehicle. You need to allow them a reasonable time span to collect the vehicle. I would say no more than 14 days from today

[DJ-1988]

Re: Voluntary Termination of Car Finance

Hi Guys,

Thought I would give you guys an update and try and get a bit of advice. The hand over went perfectly. However I have just received a letter in the post, the gist of it is below:

Under the terms and conditions of your recent financial agreement with Peugeot Financial Services, they are required by law to issue a notice for charges due following your recent voluntary termination. These charges are in relation to damage above fair wear and tear and/or excess mileage as stipulated in the terms and conditions of your contract and in the voluntary termination response form you recently received.

The notice is served under s86E of the Consumer Credit Act 1974 in relation to your Finance Agreement(s).

The terms of agreement[s] allow us to charge you for the extra costs we incur if you are in default; that is, if you fail to keep to the agreed terms. You are in default and details of charges we have added to your account are set out below.

And then they basically list out the pro rata excess mileage charge of around £240.00. There are no damage charges whatsoever. They then continue with:

In accordance with your terms and conditions of hire it is found that the vehicle had exceeded your contracted mileage.

Are they able to charge me for pro rata excess mileage? Especially under s86e, which as far as I can see is related to defaulting, which I don't think I have done. The mileage I have used isn't over and above what I would class as fair wear and tear (Contract Mileage over the 3 years was 10000, pro rata'd down to 25100 and I had done 30050 there or there abouts).

Most things I have read advise to just fight the charge, but I can't find much information about fighting it when they cite s86e?

[R0b]

Re: Voluntary Termination of Car Finance

Hi DJ,

See letter template I posted in this thread which might help you.

http://www.legalbeagles.info/forums/...RMS-Receivable

I'm not sure why they are referencing a default but it seems like it's scare tactics to me.

[DJ-1988]

Re: Voluntary Termination of Car Finance

Hi DJ,

See letter template I posted in this thread which might help you.

http://www.legalbeagles.info/forums/...RMS-Receivable

I'm not sure why they are referencing a default but it seems like it's scare tactics to me.

Hi Rob,

Cheers for the advice. Yeah I thought it was strange. It must be a new tactic from RMS Receivables. I will have to write something up to the same effect as what you have added in the other thread.

Regardless of this, do they have any right to request excess mileage charges? Has it been tested in court at all?

[R0b]

Re: Voluntary Termination of Car Finance

It's a difficult question, and I am not aware of excess mileage charges being argued in court. Liability on the debtor is restricted and the only way for them to receive compensation for excessive mileage would be to argue that the car was not in a reasonable condition upon return. They would need to provide evidence on a balance of probabilities (51% or more) that you failed to take reasonable care of the vehicle and they would have to provide some kind of evidence of the market value of a vehicle in a reasonable condition to the market value of the your vehicle in its current condition - the difference would be claimed by them.

Whilst they can argue that some of the car's market value is lost due to higher mileage than what the contract says, in your defence you could argue that actually the car has been spending alot of time on the motorway, which has less wear and tea on things such as the brakes, clutch etc. and that the engine will be running at its optimal temperature as opposed to regular stopping and starting city driving. If the car has a good service history, it might be difficult to argue any loss of value of the car.

There will of course be others arguing the opposite but unless we are talking about an expensive car where the loss of market value could be high, then the cost of going to court and employing a barrister will be outweighed by writing it off. I noticed in another thread Fiat offer a fixed sum loan instead of a hire purchase or conditional sale agreement where debtors do not get VT rights but the effect of that is that the debtor owns the car. This could be the way moving forward for lenders to bypass agreements where people can VT and lenders sit with a depreciated car potentially making a loss.

[judgemental24]

Re: Voluntary Termination of Car Finance

Having excess milage charges cannot stop your right on doing a VT.
That is a seperate contractual issue

[DJ-1988]

Re: Voluntary Termination of Car Finance

Having excess milage charges cannot stop your right on doing a VT.
That is a seperate contractual issue

Hi Judgemental. The VT has gone through, car has been collected. This is the aftermath where it seems they try and get as much money out of the deal as possible. They couldn't find anything wrong with the car as any scratches were deemed acceptable under wear and tear (I went through each scratch with the BVRLA guidelines to check before I VT'd it and any damage that wasn't acceptable I got fixed), so they are going for the excess mileage.

[DJ-1988]

Re: Voluntary Termination of Car Finance

So I have written something, using R0b's template as a guideline. Could you quickly check over it for me to make sure that I am ok to send this. I am a bit dubious about referencing the terms and conditions in the agreement as I am meant to be arguing that these are unenforceable as I basically cancelled my agreement with them when I VT'd it:

Dear Sir/Madam,

Re: Reference xxxxxxx
Agreement Number: xxxxxxx
Vehicle Registration: xxxxxx

I am writing to you with reference to the above matter and your letter dated xx/xx/xxxx.

Please note that liability in relation to any excess mileage on the vehicle is denied.

It is noted that in the letter you appear to purport that I am in default of sums owed under the agreement to the total of £xxx.xx. As you will be aware, I invoked my statutory right under section 99 of the Consumer Credit Act 1974 which states that a debtor has the right to voluntarily terminate the agreement prior to the end of the agreement provided that he has paid one half of the total amount payable. Further to this, as long as the goods are deemed to have been taken reasonable care of, the debtor will not need to pay anymore.

As the agreement was voluntarily terminated which was accepted by Peugeot Financial Services, you cannot supply me with a notice of default under the agreement. Any attempt to apply a default notice in respect of my credit report to any of the credit reference agencies will be deemed factually incorrect and will have an impact on any future credit I may request. I therefore reserve the right to take further action including, but not limited to, commencing legal proceedings for defamation, breach of contract, negligence and malicious falsehood.

Regardless of this, a contractual term cannot compel me to pay in excess of that set in statute law. The only requirement under statute law is that the goods are in reasonable condition (evidenced by the condition report of the vehicle you attached to your letter) and that in excess of 50% of the total amount due under the agreement is paid (which has also been confirmed by Peugeot Financial Services).

If you wish to argue that the mileage on the car means the vehicle is not deemed to be in reasonable condition, please refer to section 18.4 of the agreement where at no point does it mention mileage as a contributing factor to determine that the condition of the vehicle is reasonable upon return.

Please confirm by return that this matter is now closed.

Kind Regards,

[R0b]

Re: Voluntary Termination of Car Finance

So I have written something, using R0b's template as a guideline. Could you quickly check over it for me to make sure that I am ok to send this. I am a bit dubious about referencing the terms and conditions in the agreement as I am meant to be arguing that these are unenforceable as I basically cancelled my agreement with them when I VT'd it:

Dear Sir/Madam,

Re: Reference xxxxxxx
Agreement Number: xxxxxxx
Vehicle Registration: xxxxxx

I am writing to you with reference to the above matter and your letter dated xx/xx/xxxx.

Please note that liability in relation to any excess mileage on the vehicle is denied.

It is noted that in the letter you appear to purport that I am in default of sums owed under the agreement to the total of £xxx.xx. As you will be aware, I invoked my statutory right under section 99 of the Consumer Credit Act 1974 which states that a debtor has the right to voluntarily terminate the agreement prior to the end of the agreement provided that he has paid one half of the total amount payable. Further to this, as long as the goods are deemed to have been taken reasonable care of, the debtor will not need to pay anymore.

As the agreement was voluntarily terminated which was accepted by Peugeot Financial Services, you cannot supply me with a notice of default under the agreement. Any attempt to apply a default notice in respect of my credit report to any of the credit reference agencies will be deemed factually incorrect and will have an impact on any future credit I may request. I therefore reserve the right to take further action including, but not limited to, commencing legal proceedings for defamation, breach of contract, negligence and malicious falsehood.

Regardless of this, a contractual term cannot compel me to pay in excess of that set out under s.173 of the Act. The only requirement under statute law is that the goods are in reasonable condition (evidenced by the condition report of the vehicle you attached to your letter) and that in excess of 50% of the total amount due under the agreement is paid (which has also been confirmed by Peugeot Financial Services).

If you wish to argue that the mileage on the car means the vehicle is not deemed to be in reasonable condition, please refer to section 18.4 of the agreement where at no point does it mention mileage as a contributing factor to determine that the condition of the vehicle is reasonable upon return.

Please confirm by return that this matter is now closed.

Kind Regards,

Looks fine to me but I would take out the last paragraph in red, you don't want to be helping them out - keep it factual and it is down to them to work out what to do.

Just inserted a few words on the paragraph above it also for clarification. Other than that ping it off and see what happens!

[DJ-1988]

Re: Voluntary Termination of Car Finance

Looks fine to me but I would take out the last paragraph in red, you don't want to be helping them out - keep it factual and it is down to them to work out what to do.

Just inserted a few words on the paragraph above it also for clarification. Other than that ping it off and see what happens!

Hi Guys,

Here is an update. I have just received it via email:

We write with reference to your letter dated 23^rd November 2015. The contents of which have been noted.

Please see Section 99 and 100 of the Consumer Credit Act

• Section 100 subsection (4) of the CCA, stipulates that ‘If the debtor has contravened an obligation to take reasonable care of the goods or land, the amount arrived at under subsection (1) shall be increased by the sum required to recompense the creditor for that contravention, and subsection (2) shall have effect accordingly.’ This is further extended in section 101 subsection (2) Whereby “Termination of an agreement under subsection (1) does not affect any liability under the agreement which has accrued before the termination” . Any sums due to under that agreement that is accrued during the period of said agreement and fall due during the Voluntary Termination process is to be paid in excess or the 50% Value.

Paying in excess of the 50% will not be taken into account regarding the charges. Why would this be the case? You have the vehicle for the extra period of time. The contractual agreement was actually for 37 months but was handed back after 31 months, again paying over 50% is irrelevant.

The excess mileage will remain at £240.00.

--------------------------------------------------

As far as I am concerned, the above doesn't really say that I have to pay the pro rata excess mileage charge does it?

Not sure where to go from here. Any advice?

[R0b]

Re: Voluntary Termination of Car Finance

It seems they may have got the wrong end of the stick and completely ignored section 173. Here's what is says, key points highlighted in red:

A term contained in a regulated agreement or linked transaction, or in any other agreement relating to an actual or prospective regulated agreement or linked transaction, is void if, and to the extent that, it is inconsistent with a provision for the protection of the debtor or hirer or his relative or any surety contained in this Act or in any regulation made under this Act.

In plain English, it is simply saying that where a debtor has terminated under s.99 of the Act and their liability is restricted to that amount, any terms within the contract is void and unenforceable which attempts to impose further liability above the amount paid. Statute law prevails over contract law.

An authoritative book, Goode on Consumer Credit Law and Practice says the following:

No Contracting out
Any term of an agreement imposing liability on termination by the debtor which exceeds the amounts provided for by or under CCA 1974, s 100 is void: see CCA 1974, s 173(1).

S.100 CCA 1974

the overall effect is that a debtor's enforceable liabilities under such an agreement are restricted to payment of half the total price; he may terminate before that amount is paid, incurring the maximum liability prescribed by s.100, and after that amount has been paid he may terminate without further liability although he may not recover any payments already made.

There is also an example and further explanations in the Law Society book on Consumer Credit, I have a copy of the relevant sections will upload later when I have the chance. However they simply have no leg to stand on really in reclaiming the amount back. There is already case law out there which confirms liability is restricted. This is why lenders wanted this clause removed and almost did!