Hi all. I am almost 30 months into a 5 year HP payment plan on my current car. As far as I am aware this means I could hand the car back to the selling dealer and walk away with nothing more to pay.
However, being almost two and a half years old the bodywork is not perfect, no dents but a few minor scratches that could do with work before the dealer would sell it on. My question is would they expect me to pay for these repairs or would they be considered average wear and tear?
Echo the previous post. I returned a car, it had stone chips and a small dent (5p piece size). They sent someone from the auction house to collect and inspect. I didn't bother making any special effort, it was grubby.
Miller, does "as far as I am aware" mean that you have read and understood the credit agreement into which you have entered?
If it is a Hire Purchase agreement or a Conditional Sale agreement, where the lender retains ownership in the car, then it will contain a clause identifying your legal right to terminate the agreement early. This is required under the Consumer Credit Act and will identify that once you have paid half of the Total Purchase Price of the car (a value that includes the initial price of the car, all the interest and any other charges involved in the contract and will be identified as a £.p value in the agreement. ) then you can return the car and not pay anything else. If it is a Personal Loan agreement. which is quite often referred to as "hire purchase" by car sales staff, then there will be no such clause in the agreement and you will not have any such rights.
If there is a voluntary termination clause in the agreement, then there will also be reference to you having "looked after" the car and this can be open to interpretation by the lender. But in practice it is unlikely that legal action, by them, would be successful unless it was clear that you had acted maliciously or recklessly towards the car before returning it.
My advice. Read the credit agreement to establish the nature of the agreement, and, if you don't have a copy, then ask the lender for one.
A PCP agreement does not have a definition in law and the underlying legal agreement will either be a Hire Purchase ( or Conditional Sale) agreement or a Personal Loan agreement, in either case with the added proviso of a guaranteed future value. Consequently, there may be a right of early termination in such a contract and, by excercising this right, creditors may be able to escape any excess mileage charges or dilapidation issues identified in the clauses relating to the future value.
If it's a lease car or contract hire then "Looked After" will involve the British Vehicle Rental and Leasing Association (BVRLA) definition of "Fair Wear and Tear" (FWAT) which every leasing company seems to interpret differently.
FWAT is an assessment of fly damage, stone chips and minor dents.
Some lease companies almost never charge anything for excessive wear and tear, some seem to always find about £300 of damage and some seem to regularly get close to the £1000 mark and (arguably) regard it as an additional revenue stream.
The highest I ever saw was a bill for £2000 from a leasing company attached to a major motoring manufacturer which was withdrawn altogether when the owner involved us and we challenged it.
You are always going to get "wear and tear" damage on any vehicle and you can insure against it without a claim affecting your main motor cover policy excess or no claims bonus.
It is variously called "SMART" insurance or "Chip and Ding" or "Ding and Dent" and basically it covers minor damage such as someone opening their door on to your car in a supermarket car park. It utilises mobile repairers to
In theory it is a very good idea but the business model is it is largely offered at Point of Sale by dealers on higher value marques and the dealer's "F&I" department (usually described as "Business Managers" to the public) have historically demanded upwards of 40% commission on the sale meaning it is not price competitive.
I am looking at an offer at the moment whereby we can offer it directly to the car buyer at a price where it becomes both affordable and an economic practicality.
Handing back a car on Hire Purchase -
What happens if I am charged say, £1,000 for damage to the vehicle but I have however paid over £1,000 more than i needed to in order to terminate the agreement? Would the £1,000 i have overpaid absorb any charges? Or would I get charged for repairs in full?
In a word manc_sensation, No. At any time during the currency of the agreement, assuming that you have paid more than half of the "Total Purchase Price" and the agreement is a Hire Purchase or Conditional Sale contract, you can voluntarily terminate the contract and return the car - having looked after it throughout your tenure of the car. There is no provision under the Consumer Credit Act for any credit to be taken into account for overpayment when the Finance Company assesses that unfair wear and tear has occurred.
Handing back a car on Hire Purchase -
Thanks, I have a dent in my A post that a cyclist did, I've had a quote of £500 to repair this, do lease companies generally charge a lot more when charging for unfair wear & tear? I can't decide whether to just hand it back & see what happens or get the work done before I do.
That sounds like a quote for a very professional repair, but obviously I haven't seen the damage. Obtain another couple of quotes, in writing, and keep hold of the cheapest one. Hand the car back without repairing it, and if the finance company claim a higher damage value, you have evidence to contradict their claim. And you will win if the claim goes legal. They may well not charge, or demand a lower amount, in which case you've gained anyway.