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Terminating Finance Agreements - sealey
Just over 12 Months ago, I bought a FOrd Focus frmo virgin cars on a Bank of Scotland 4 year HP scheme. I have made all my payments for the last 13 months on time but due to a change in my financial circumstances, will no longer be afford to keep up payments.

Does anybody know how easy it is to terminate such an agreement, what the penalties are and if it will give me a bad credit rating? Don't want to approach the Bank if this is not worthwhile. I have also gone over my allocated mileage!

Thanks in advance,

Sealey
Terminating Finance Agreements - No Do$h
It all depends on how much of the total finance package you have already paid. You usually have a right of voluntary surrender, which leaves you liable for any shortfall on the sale of the car, or you have the right to terminate at no cost if you have paid 50% of the total amount due under the agreement (excluding any additional insurances).

On the finance agreement you should see a section with 2 figures, one for 1/3rd of the total amount due and one for half. This doesn't apply to every agreement type/amount though, so a bit more homework is needed.

At the head of the finance documents it should describe the contract (Consumer Credit Agreement Regulated under the Financial Services Act or Hire Purchase or Non-Regulated agreement or similar).

If you can post what type of agreement and whether the 1/3 and 1/2 figures are quoted I should be able to help some more.


No Dosh - Backroom Moderator
mailto:moderators@honestjohn.co.uk
Terminating Finance Agreements - Vansboy
Sorry to hear that you've got these problems, Sealey.

It's important that you DO talk to the bank, they will have procedures to help you.Perhaps by suspending a few months payments, would be OK, if your cicumstances would be back on track in a projected time?

There are ways that you can hand the car back, if you've re-paid more than 50% of the debt - depends on if it was HP & not a pesrsonal contract plan.

Regarding your credit scoring rating, if you do terminate early, this will be noted, but more important, is that it is NOT due to the vehicle being reposessed, rather than handed back.

Get a few valuations from local dealers on buying the car for cash - DON'T sell it, though - it's not yours!! This will give you an idea as to the true shortfall, in the amount outstanding.

Your local Citizens Advice will have a number for debt advice.Theres a freefone Natinal Debtline, too IIRC. Thats helpful if things are a bit more involved, than just the car.

More info from everyone else, shortly!

Good luck!

VB
Terminating Finance Agreements - Mapmaker
Ouch! Bad luck.

Talk to the bank, Sealey. They won't bite. I'm sure they have this happening all the time for all sorts of reasons. What if you wanted to swap it for a Transit, for example, for your new job. What if you were suddenly given a company car & no longer needed a Focus.

Just ring 'em and say 'I've done x,000 miles & want to hand my car back now, what will it cost me?' They will have a formula. It won't affect your credit rating (your reason for handing it back might be any of the above). They won't be out of pocket (oh no!), they might sting you (oh yes!) but then they will be happy, so it won't affect your credit rating.


[ghastly old curmudgeon mode]And may this be a lesson to people buying new cars on finance when they cannot really afford it. It's all very well for Dulwich & Patently to run a brand new car, but the rest of us should not feel the need to borrow money to keep up with them. For goodness sake, it was only a Focus! Not something where the heart ruled the mind like a 944.[/gocm]
Terminating Finance Agreements - patently
It's all very well for Dulwich & Patently to run a brand new car


Thanks (I think..)

I admit that our new (and nearly new) private cars have been funded from cash. On both occasions, the dealer was very keen to interest me in a finance deal, which is indicative of something. Both times, I let them work out some figures for me. The crucial number to look at is the total at the bottom - i.e. how much you have paid for the car when all is said and done. On one example, this was 25% more than the list price of the car. Quite enough to frighten me away.
Terminating Finance Agreements - Mapmaker
>>I admit

That's no admission. 'I am proud to announce...' would be more suitable.
Terminating Finance Agreements - Blue {P}
Finance is often going to cost more than cash in total, but not always, I sold a Mondeo the other day that was going to cost £13,995 cash, the customers ended up financing by paying one lump now (roughly half) and the other half in one year. The total payable wasn't much more that £13K, so they saved nearly £900 and on top of that they get to keep half the money in the bank earning interest for an extra year.

I was so pleased with that deal that even I had a warm glowy feeling when it was done, everyone won :-)

For the cheapest total payable cash is often best, but, ALWAYS look at what finance is been offered, 'cos sometimes it really is better to finance than shell out all the money in one go.

Blue
Terminating Finance Agreements - patently
Agreed, Blue - that was why I let them quote. It wasn't so for me, though, that time!
Terminating Finance Agreements - Mapmaker
It's very unclear to me, Blue, why you think that your employer won out of that - they didn't have the money in the bank & they didn't earn the interest on the money.
Terminating Finance Agreements - DavidHM
The car may well have been paid for by the finance company at front, albeit at a reduced price, say £12,500 - but one with enough profit in it for the employer to make it worthwhile? On top of that there may well have been a commission from the finance company.

Alternatively, if it's anything like a "buy now pay later" deal in retail stores, the employer gets paid in full (probably more than full) on the basis that the purchaser, finding himself with a bill for £6,500 for the car in a year's time, will probably (though probably unwisely) want to arrange alternative finance through the existing finance company.

This may simply be in the form of "Pay the lump sum now (and no interest) or £200 × 36."
Terminating Finance Agreements - Mapmaker
I agree with both your scenarios, David. But in both cases the profit is for the finance company, not for Blue's employer. The latter comes off worse.

As the customer was in a position to pay cash up front, there was no suggestion that the car would otherwise not have been purchased.

Car could have been sold for 14k cash.

Instead sold for 13.1k cash. Finance company gets cut, so garage gets 12.5k cash (maybe a bit more if it gets a kickback from Finco).

If Blue thinks that doing that has made his employer more money, then he's wrong...


Consequently, when faced with a customer offering cash, Blue should not try to offer them one of these deals. (It's not often I would try to stick up for a main dealer against the customer...)
Terminating Finance Agreements - DavidHM
was going to cost £13,995 cash

Doesn't say where the cash was coming from.... plus the same car might well have been £12k at a broker or supermarket.
Terminating Finance Agreements - Mapmaker
People who buy second hand cars from nice young men like Blue at main dealers don't go to car supermarkets.

I think he does say that the cash was available as he mentions that the customers got to keep it in their bank account for the next year.


Anyway! Blue can settle this: was the 13995 the lowest you could go for cash?
Terminating Finance Agreements - patently
Mapmaker,

If you have a sheep and you want to make money from it, there are two ways.

First, you can grab the sheep, drag it into an abbattoir, slit its throat, butcher it into nice lamb chops, and sell them to hungry people.

Second, you can treat the sheep with respect, gain its trust, persuade it to let you handle it, shear off the wool, release the sheep back into the field, and sell the wool to cold people who want to make jumpers.

One of them you only do once. The other you can again, and again, and again.

So Blue's employers may make more than it looks like, if the customer leaves happy with the feeling that Blue had their best interests at heart.
Terminating Finance Agreements - helicopter
Or using your analagy they may just feel that they have been well and truly fleeced......
Terminating Finance Agreements - Mapmaker
Your day-to-day life obviously doesn't bring you in contact with fleece prices. Currently about worthless. Whereas a nice lamb chop...

Whilst I take your point patently, I do not believe for even one second that people have such devotion to a brand of cars or to a dealer that it is worth losing £1500 today in the hope of selling another second hand car in 6 years time. That nice warm feeling doesn't last very long, and even my father has never bought a car from the same place twice (excepting a car supermarket where such shenanigans of false prices do not apply). £1500 is a lot to pay for some rather transitory goodwill. imho.
Terminating Finance Agreements - Mapmaker
Sheep are a very good example, as oversupply in the sheep world is as high as in the car world.

A ewe is worth something because she produces offspring. Her female lambs are worth something because they can produce offspring. Her male lambs are virtually worthless (the profit after bringing them up & getting them to the abbatoir is virtually nil).

So her only worth is in producing further ewes whose only worth is in producing further ewes... as the fleece is worthless & there's no profit in the male lambs. An entirely false market. And now to the Rover thread...
Terminating Finance Agreements - patently
Yes, I thought we might end up discussing the travails of sheep farmers. But the point is there, and the amounts involved affect the balance but not the principle. Many buyers do return to the same dealership.
An entirely false market.


Unless you think the market for fleece or lambchops is going to improve in the future.
And now to the Rover thread...


LOL. and again. Oh dear. My sides hurt.....thanks...
Terminating Finance Agreements - Mark (RLBS)
Don't even *try* and get sheep into Motoring, not even in Wales.

They're not motoring and they are most certainly not related to "Terminating Finance Agreements".

Now cut it out before you all get sent to the naughty corner.
Terminating Finance Agreements - patently
Don't even *try* and get sheep into Motoring, not even in Wales.


Yes - imagine the rise in CO2 emissions if they all discover the joys of personal mobility!

And think of the congestion on those previously empty roads....


[oops - where's that corner, then? Is it where the communal coat is kept?]
Terminating Finance Agreements - Mapmaker
>>But the point is there, and the amounts involved affect the balance but not the principle.

But the balance is (apparently) so far off balance that the principle is shot out of the water. I don't know what a car dealer makes on a 14k car, but I doubt it is over £3k. So would you throw away 50% of your gross profit (so probably the entirety of your contribution) for the hope of another sale 6 years hence?


And the market for wool isn't going ot improve whilst people insist on having polished wooden floors. Or leather seats in cars*

_______________________________________

* I did it!! I did it!! A motoring link to sheep. And don't ever buy a second hand car from Wales if you can avoid it.
Terminating Finance Agreements - Mark (RLBS)
[sigh] ...and its not even Friday.
Terminating Finance Agreements - patently
[sigh] ...and its not even Friday.


We're in training ... wait til you see how good we are by then!

[Now ... where's that coat?]
Terminating Finance Agreements - patently
so far off balance


In this case, possibly. OK - probably.

There are be cases where it is not - I see them often when dealing with clients. And I have returned to dealerships that treated me well; I won't buy from them regardless of cost, but they have an advantage.
A motoring link to sheep


Beat you to it!
Terminating Finance Agreements - Mapmaker
>>OK - probably.


Huzzah! I won.

Ner ner ner ner ner!

I'm going to take the afternoon off from the BR to celebrate. I'll let you know if I see any sheep on the WAGN railway line*.

_____________________

*alternative transport - motoring link.
Terminating Finance Agreements - Blue {P}
Or using your analagy they may just feel that they have
been well and truly fleeced......

Lol :-)

I had typed out a reply explaining how I was not an idiot, and would not have persuaded customers, who were happy to give us £13,995 in cash, to take a finance package if it was going to lose us any profit, or indeed if my finance manager didn't encourage me to do it, unfortunately I lost it thanks to forum time out!

Anyway, can't be botered to retype it all other than to say that the garage didn't lose out, my manager was happy, and the customers were so happy with that deal that they immediately bought a second new car off me, at least we stand a vauge chance of seeing some repeat business.

Blue
Terminating Finance Agreements - patently
immediately bought a second new car off me


I win after all! Ner ner ner ner ner!
Terminating Finance Agreements - Blue {P}
I missed this reply.
People who buy second hand cars from nice young men like
Blue at main dealers don't go to car supermarkets.


Aww thanks :-) But I must point out that the car was brand new!
I think he does say that the cash was available as
he mentions that the customers got to keep it in their
bank account for the next year.


It was.
Anyway! Blue can settle this: was the 13995 the lowest
you could go for cash?


Yes, they may have managed a small reduction, but no where near the saving they made by financing it.

Blue
Terminating Finance Agreements - Mapmaker
>>>> Anyway! Blue can settle this: was the 13995 the lowest
you could go for cash?


>Yes, they may have managed a small reduction, but no where near the saving they made by financing it.


Oh please, please tell us how your boss was happy. I know it's a pain to retye it, but I'd love to understand how this stacks up.

Somehow or other, somebody has lost out on the opportunity to get 1,000 out of your buyer. Leaving aside the second new car (how lucky was that! how often do people buy two new cars at once?) for a moment, it is bemusing me!
Terminating Finance Agreements - Blue {P}
Well of course someone is out of pocket, I don't know if it is Ford or the finance company for certain, but it wasn't us and it wasn't the customer. All I know is that the manager was happier with the finance deal than with the customers paying cash, when they would have been happy to pay the cash, I think that says it all really :-)

This also leads to an interesting question about how much profit people think a garage actually make from the sale of, for example, a £10,000 car when bought brand new and using cash, but that is an entirely different thread.

Blue
Terminating Finance Agreements - Mapmaker
::scratches head::

So whom do you work for Blue? A Ford main dealer? And who owns the Ford main dealer - Ford?

I'm happy to agree that the customer wasn't the loser!

I can understand that the dealership might not have been the loser.

But Somebody was, and whoever it was needs to think a bit straighter, if you ask me!

I suppose that there may be a target for quanity of finance sold in the month, and your dealership was under target, so was deperate to sell the extra finance, whatever the cost - in this case £900 (which was the bait the customer had to be given to take the finance), plus whatever you had to pay to the finance company - say a minimum 8% (?) on 6k, so £500.


::;;continues to scratch head::
Terminating Finance Agreements - Blue {P}
Yes, but we don't pay the finance company any commission, they send us the full sale price of the car, as well as sending us our finance commission.

Lets use *totally random* figures to illustrate roughly how a car finance deal might work.

Cost of car £10K

Cash buyer, we get - £10K

Finance sale - we get £10K plus £xxx finance commission.

I know that the above doesn't explain the circumstances that I have described, but it at least clears up a seperate misunderstanding.

I was only trying to give an example of how finance isn't always bad for the customer, I didn't particularly want to go overboard with in depth explanations. I am only a salesman, I do not understand the complexities of car finance myself, all I know is:

Customer - Happy

Manager - Happy

That's all I care about.

Blue
Terminating Finance Agreements - Mark (RLBS)
Mapmaker - about time to let it go, I think.
Terminating Finance Agreements - patently
>>I admit
That's no admission. 'I am proud to announce...' would be
more suitable.


A very good point, MM, but it's a question of tact. A few posts above my comment is a BR member who can't meet his finance payments on a Focus. I, on the other hand, can pay cash for a 911 and an X5. I feel genuinely sympathetic to sealey, as there have in fact been times when I was very nearly in that situation. If I shout to the rafters about the achievements that I am in fact proud of, this could mask that sympathy.

I regard myself as incredibly lucky. I hope some comes your way, too, sealey. Best wishes.