Voluntary Termination - Car Finance

[tn7825]

Hello

Sorry if this has already been covered elsewhere. I have had a read through lots of threads, but can't find this specific issue.

I took out an HP agreement for 48 months, and have so far, paid only 6 payments. However, I am unable to afford the repayments so have sent the template letter to give VT and requested collection of the car or instructions on where to deliver it.

The finance company have emailed to say that they won't accept VT as the amount payable to cover 50% of the total payable has not been received. I can't afford to pay the full 50% at this stage, so would be looking to agree a repayment plan after the VT.

Email sent to me as follows :-

Section 99 does not give provision for termination before you have paid the required amount under the Voluntary Termination clause. S.99(1) does however state that you may terminate the agreement early, but does not declare it can be done before payment of the VT amount. S.99 (2) states that termination under subsection (1) does not affect any liability under the agreement which has accrued before the termination. This relates to arrears where the total paid has exceeded the VT amount.

The precise wording for the act can be found here: http://www.legislation.gov.uk/ukpga/1974/39/section/99

I attach the terms and conditions from the credit agreement. I draw your attention to the section “Termination and Repossession”, which states you are required to pay immediately the shortfall of the VT amount before termination.

Please help? Is what they are saying correct and how should I proceed if not?

Thanks in advance

[R0b]

Re: Voluntary Termination - Car Finance

Who is the Finance Company? They have erred in their interpretation - I have highlighted the relevant part below which should be self-explanatory as to why they are wrong to say that you must pay 50% before you can VT.

At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement.

S.99(2) relates to accrued arrears, but this does not include payments which make up the 50% as they are not accrued. Accrued arrears are missed monthly instalments, so for example if you paid over 50% already and you missed 1 month and then decided to VT, you are liable to pay the 1 month as it is in arrears.

The terms of the contract does not prevail over the CCA. If there is a term which is inconsistent with the CCA then it shall be deemed void - this is explained in s.173 of the CCA.

If you want further information click on the link in my signature below. If you are still struggling, let me know and I will try to help

[tn7825]

Re: Voluntary Termination - Car Finance

Thanks for your quick reply! Much appreciated.

The finance company is CLS Finance. I understand what you have said and that was my own interpretation of s.99. I'm just not sure how to answer this latest email from them, so any help would be really appreciated. Shall I just state what you have said above?

[R0b]

Re: Voluntary Termination - Car Finance

Click on this link there is a few sample letters towards the bottom you can use to frame your response - http://www.legalbeagles.info/forums/...ry-Termination

[tn7825]

Re: Voluntary Termination - Car Finance

Hi again,

I'm still a little uncertain about this. Just to state the facts again :-

I took out HP for a car in October last year
I have paid 6 payments out of the agreed 48 and am in arrears of 1 monthly payment
I sent a VT letter on 24/05/16 which CLS Finance say they won't accept until I pay the full 50% owing of over £4000
I can't afford to pay the £4000, but will try to agree some sort of repayment schedule once the VT has been accepted
CLS Finance called today and are telling me they will be going down the "repossession route" unless I made a payment today

So far, I have been sticking to my guns and informing CLS Finance that I am aware of my right to VT, regardless of arrears and 50%. I've also sent a follow-up letter to inform them that I will cancel insurance etc after 14 days if the car is not collected. I still feel a little uncertain about all of this given the stance the finance company are taking. Any more advice would be really appreciated.

Thanks!

[R0b]

Re: Voluntary Termination - Car Finance

You could respond along the lines of something below, or you could also edit it to say you treat this letter as a complaint and expect them to follow the complaints procedure.

Dear Sir / Madam,

Agreement Number:
Registration:

Re: Voluntary Termination of Hire Purchase Agreement

I refer to your [letter / email / telephone call] of [DATE] concerning the termination of the Hire Purchase Agreement (the "Agreement").

You are aware, and have acknowledged in previous [letters / emails / calls] that I have given notice to terminate the Agreement in accordance with section 99 of the Consumer Credit Act. It appears to be your position that I am not able to terminate the agreement until I have paid you at least 50% of the total price payable however, I believe you have misunderstood section 99 of the Act. For the avoidance of doubt and ease of reference, section 99 (1) states the following:

[SECTION 99]

As you will see, it makes clear that I am able to terminate the Agreement at any time before the final payment is due, and it does not explicitly say that payment must be made before I am able to terminate. Therefore, my notice to terminate the Agreement on [DATE] is valid. As you are already aware, my reasons for terminating the Agreement is that I have entered into some financial difficulties and although I am unable to repay the outstanding balance in a single transaction, I am however prepare to make reasonable monthly repayments until the balance has been paid off. May I remind you that as an authorised firm, you have certain legal obligations under the FCA rules and any breach of such rules, shall be reported to the FCA and an official complaint made to the Financial Ombudsman.

I also note that you are threatening to "repossess" the vehicle in accordance with the Agreement. Again, the Agreement has been validly terminated in accordance with section 99, and the outstanding balance is merely a debt that is owed. Your right to repossess no longer applies given that there is no breach of the Agreement. I have suggested on a number of times that the vehicle is available for collection yet I am at a loss as to why you are refusing to pick up the vehicle. You have had ample time to arrange a suitable collection and it appears that your behaviour or reasons for declining to collect the vehicle is unwarranted.

Nonetheless, I am prepared to allow a further [7/14 days] in order for you to collect the vehicle at which point, it will be my intention to terminate the insurance, tax and notify the DVLA that you are now the registered keeper. All liabilities shall therefore rest with yourself.

I trust that this clarifies matters.

Yours sincerely,

[tn7825]

Re: Voluntary Termination - Car Finance

Hi,

I'm still not getting very far with this.

I sent the letter suggested, but since then I have received a letter to say that they have terminated the agreement and intend to repossess the vehicle. I then sent an email saying that as I had already given VT, their letter was not valid and that if the car was not collected etc. then I would stop the insurance and tax etc (As per the letter suggested)

Now today I got the following email :-

Thank you for your email (below).
As you have not satisfied the requirements of the Consumer Credit Act in particular “section 100”, the termination notice that you have served is invalid and is therefore of no effect. In our letter of 3^rd June 2016 we explained why your argument is flawed and we encouraged you to take it up with your local solicitor, who would if asked have confirmed that our interpretation of the Act is correct and that yours is incorrect. If alternatively you wish to take this matter up with the Financial Ombudsman Service (FOS) then we have no objection to that course of action either.

With regards to the vehicle. You should be aware that liability under the Hire Purchase agreement towards the safekeeping of the vehicle remains yours until we have taken physical possession of the car from you and that there are no circumstances that diminish your liability in that respect. We would therefore recommend that you continue to cover the vehicle with a fully comprehensive policy of motor insurance until such time that the car is physically in our possession.

We cannot stop you from surrendering the car back to us. If you have decided that you are not going to make any further payments on a voluntary basis then you may if you wish return the car to the depot from which it was bought, together with the MOT certificate and DVLA V5 document. If you choose this action then please telephone us to confirm a date and time so that we can arrange for a receipt to be issued for the return of the vehicle. If you surrender the car to us it will not count as a voluntary termination. Where you surrender the car back to us it will be sold and the sales proceeds will be applied in the reduction of what you owe to us. Thereafter we will take legal action against you for the recovery of the resulting shortfall balance.

Alternatively you may resume your payments for the car or otherwise if you continue to make default the car will be repossessed after we have served any notices required by law and thereafter we will take legal action against you for any resulting shortfall balance.

I've sent an email back to advise them that my position is unchanged and I have no intention of delivering (surrendering) the vehicle unless they recognise the VT, and no more payments will be made either. Should I do anything else?

Thanks,
Tony

[R0b]

Re: Voluntary Termination - Car Finance

Your next option will be to make an official complaint to the Ombudsman, outlining the position. I have not seen the letter dated 3 June, unless it is what you referred to in your first post, if not you could post up a copy with personal information removed and I can take a look.

If you think about it logically, section 99 says that you can terminate at any time but it does not say that it is subject to payment of one half. Section 100 also confirms that where the agreement is terminated under section 99, the debtor shall be liable to pay the creditor one half of the total amount - again no reference to the fact that for termination to take effect you must pay one half.

If by what they are saying, you must pay one half before you terminate then don't you think that would have been written into the Act if it is explicit enough to say that you can terminate at any time, there is no condition or criteria to satisfy before the agreement can be terminated and so they are just inferring something that simply is not there.

What you decide next is entirely your decision but your option is to either termination the insurance and inform the DVLA of change of ownership and complain to the Ombudsman.

OR

You can carry on the insurance/monthly payments but seek to recover the payments from them if the Ombudsman decides in your favour. If the Ombudsman does not go in your favour you dont need to accept it and it will be up to them to recover the sums from court, or alternatively you could pay a bit more and seek to recover those sums back from them through the courts.

[tn7825]

Re: Voluntary Termination - Car Finance

Thank you.

The letter of 3rd June was in reply to the last letter you had suggested, and just states that I cannot VT because 50% of the total amount has not been paid.

I will complain to the Ombudsman now as I'm just not getting anywhere with the finance company.

[tn7825]

Re: Voluntary Termination - Car Finance

Just a final update on this.

The Financial Ombudsman have adjudicated and advised the finance company as to the error of their ways! The finance company have now accepted our offer to repay up to 50% of the original agreement over 30 months, and have given us £250 compensation as suggested by the FOS.

Thanks for all your help with this! And anyone else reading this for reference, my advice is to really research your rights and ask here if you are not sure, but don't be afraid to take on the bullying tactics of finance company. In my case, they tried and tried to bully us in to submission, even after they knew we had complained to the FOS, but if you know you are right, then please stand your ground with them!

[R0b]

Re: Voluntary Termination - Car Finance

Good result and thanks for letting us know. Would it be possible to post up a copy of the Ombudsman's decision, personal info removed so that this can perhaps be used to aid others on here?