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Hi. Can anyone advise please. I have a car loan which has another 18 months of 5 years to run. Due to covid 19 I have had to apply for a payment break. My financial situation is not going to recover over the next 6 months andI am considering a Voluntary Termination. The company are saying I must pay the three months arrears from payment holiday . Is this correct. They have already advised me I am more then 50% through my agreement and can apply yo vt.
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Ok the rules on termination of hire purchase agreements are often misunderstood by finance houses and consumers alike.
The key point is you can terminate at any point up until the final payment, this is a right set out in the consumer credit act, and it applies unless the creditor has defaulted and terminated the agreement.
As far as liability goes, that is more tricky,
The Act states that the debtors liability will be 50% of the total price, if you've paid 50% then youre home and dry. But, if there are arrears you may have to pay those arrears especially if they make up the 50%
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I have been involved in leading consumer credit and data protection cases including Harrison v Link Financial Limited (High Court), Grace v Blackhorse (Court of Appeal) and also Kotecha v Phoenix Recoveries (Court of Appeal) along with a number of other reported cases and often blog about all things consumer law orientated.
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