Voluntary Surrender

[Ljo9]

After some advise for my son...
He took out a PCP agreement with Peugeot, putting down a £5000 deposit. Due to unforeseen circumstances he can no longer afford the payments...he's only had the car 6mths. They are advising him to go for Voluntary Surrender. Can anyone help advise. The car has had it's wing mirror knocked off so I know he'll be charge on top for this, but I also know they'll take it to auction and probably get minimal for it. They say he be able to set up an affordable payment plan for the balance....but what do they class as affordable.?

[R0b]

Re: Voluntary Surrender

Voluntary Surrender = Surrendering the vehicle to Peugeot, and your son will owe the remaining balance outstanding less the proceeds from the sale of the car.

Voluntary Termination = Terminating the agreement, returning the car back to Peugeot but your son's liability is limited to 50% of the total amount payable regardless of how much the car is sold for. Yes he will be liable for the damaged wing mirror.

I would strongly suggest against a voluntary surrender as your son will be in a much worse position. Quite naughty of Peugeot advising to go down the voluntary surrender route when the VT option is available and could be seen as taking advantage of your son who doesn't necessarily know his rights, which if it went to court, or perhaps the Ombudsman, they may judge it to be unreasonable on Peugeot's part.

If your son is unable to afford the payments, then I would suggest the VT approach would be the way to go and then to come up with a repayment plan that is acceptable to him. An easy way to do this is to complete an income/expenditure form (you do not need to hand this to Peugeot right now but for his own information) and see what he is left with after all expenses, and then allocate what is a reasonable sum to repay the monies whilst being able to afford his basic needs.

[Ljo9]

Re: Voluntary Surrender

Many thanks for your reply.

I asked if they told him about Voluntary Termination but I'm not sure if 50% of the value will be any less than what he would be liable for with Voluntary Surrender. Either way he's looking at owing £10K.
He's currently lost his job and has a baby on the way, they have said about a 'capped total' but I'm not sure if this changes once his employment circumstances change.

He had previously asked for a settlement figure...approx. £16.5k, but now they are saying under the VS that it is £21k.....this has confused me further.

[R0b]

Re: Voluntary Surrender

VS works like this:

total amount payable = 30k
Value of car at time of VS = 10k
total amount owed to Peugeot = £20k less instalments paid to date = amount owed

VT works similarly:

total amount payable = 30k
Car is returned to Peugeot
total amount owed to Peugeot (50% of total payable) = £15k less the monthly instalments he has paid to date = amount owed.

[Ljo9]

Re: Voluntary Surrender

Hi
Circumstances have changed since your last reply.
My son's job has been saved and he has now contacted Peugeot Finance to advise he will be keeping the vehicle and continuing with the agreement.
They have now stated that because he advised them that he couldn't afford to keep it (due to pending job loss) that they require an Expenditure Form be filled out to prove he can pay for it and additional fees are to be paid (even though he has only spoken to them verbally about surrendering the vehicle, nothing has been signed).
I have been told they can't do this and are only scaremongering..?

[R0b]

Re: Voluntary Surrender

If he hasn't actually written to Peugeot to VT then the agreement is still live since any termination of the agreement must be put in writing. At best, he could argue that he was considering returning the car and nothing final. So they can't request anything and if they terminate the agreement without valid cause, they could be in breach for wrongful termination.