Hi all. I would like your views on a situation I have been made aware of from a friend of mine.
Said friend brought a car from one of these supermarkets after they said they could "get her into a car that day" even though she had a bad credit history. The price on the screen was £7,999 but the total amount to repay was £16,300 won over by the car (usual story) she hastily signed (her problem!).
Now almost 4 years (and about 5 payment defaults) on she got a settlement figure of £10,297. Over 42 months (37 repayments because of the defaults) of about £260pm she has already paid for the car!
I have not seen the agreement but someone else has and says that she is right - yet she has recently lost her job and cannot make these £260 every month repayments yet they are thretening to take the car back and while she is happy to let them she needs it to get to job interviews and eventually her new place of work.
Sorry to rant on but it just seems so wrong, extortion? Repudiation?
Any help gladly passed on to said damsel in distress!
Cheers fellas.
|
The law says
Once she's paid of half the total she can hand the car back and that's the end of it.
AZs to whether its extortion? hardly, she entered into a legally binding agreement as an adult. Ny £500 banger gets me to work, my £50k supercar is fo fun. There's no need to send more than a grand on a car to meet necessities.
--
I read often, only post occasionally
|
Everything below is subject to this being a hire purchase agreement, rather than a personal loan.
Subject to any deductions for the car being in poor condition beyond fair wear and tear, she can hand the car back under s.99 (or is it 100?) of the Consumer Credit Act 1974. (In other words, if she wants out because she's crashed it, tough...)
The lender will probably try to make things very difficult for her and attempt to scare her, saying they'll sue for the difference (they can, but they can't win) and/or she'll never get credit again if she does. However HP is a regulated agreement and by handing it back, she will be settling, not defaulting, which means that her credit rating will not further be imperilled. (Although it sounds fairly shot as it is).
Note that the half of the total applies only to payments for the car itself. If the monthly payment includes payment protection insurance, GAP insurance, warranty, etc., they will generally be single premium insurances added to the initial finance agreement and so they'll probably have to run to term unless she succeds in challenging them under UCTA or something.
As for extortion? Er... dunno but clearly it's a deal that is designed to be a bad bargain for the purchaser and therefore there is statutory protection against the sharpest practice.
|
|
Many thanks for your help guys I shall pass it on but as pointed out she signed the agreement in the first place knowing that the charges and interest was high.
|
Just a quick question on this please as I don't know a great deal about HP and the like.
Said friend has been told that because she has defaulted (by missing a couple of repayments) that she can no longer hand the car back under the agreement despite the amount that she has now paid. Would that be correct?
|
|
I would strongly suggest a visit to the local CAB first to find out what the options are.
|
Under a hire purchase agreement, whatever you are buying belongs to the finance company until you have fully paid off the agreement.
- - - - - - - - - - - - - - - - - - - - -
What\'s for you won\'t pass you by
|
|
|
|
Said friend has been told that because she has defaulted (by missing a couple of repayments) that she can no longer hand the car back under the agreement despite the amount that she has now paid. Would that be correct?
I've got a feeling that until she has repaid any payments she has missed she is unable to hand the car back although i'm not 100% sure.
|
£7,999 but the total amount to repay was £16,300 - frightning.
If the friend makes the wrong move it could create havoc with her credit rating, get her some professional advice.
|
|
|
|
Essentially (working from the full text of the statute here: www.johnantell.co.uk/CCA1974.htm rather than any case law) she would be liable for any amounts that become due prior to termination unless the Court were satisfied that the loss arising to the creditor through early termination was less than 1/2 of the total credit price (not likely to apply here though).
If default means that the full amount immediately became due, and the Court upheld this amount, then she would be liable for that amount as it would have been incurred prior to her termination of the agreement.
However, bear in mind that any liability incurring as a penalty, i.e., punishment for breach of contract rather than liquidated damages (which are a genuine pre-estimate of the loss arising to the creditor from the breach) would not be enforceable at Court in any event.
I also fail to see how, unless she has missed rather more than 5 payments, the amount due can be more than the amount originally borrowed after 4 years when the agreement is due to be paid off in five as such the balance on such an agreement would never reduce and therefore never be paid off. (Even if the full amount were charged as arrangement fees for the finance agreement and insurance, not interest per se, 23 × £260 = £5,980 and £4k is being added on somewhere).
My suggestion would be to seek proper advice face to face from a lawyer specialising in debt matters under the Legal Help Scheme (if she is eligible) or from the CAB or from another debt-related charity such as Pay Plan or the Consumer Credit Counselling Service.
|
|
The whole point was that she had NO credit rating in the first place.
|
|
|
|
David - i've got a hunch that maybe they purchased some kind of payment protection at an inflated rate which was added to the loan which is why they still haven't paid the loan off or got anywhere near close.
|
|
|
|
Excellent advice many thanks once again - she said that the 4k added on was more fees and charges when they did another agreement to lower her monthly repayments from £287 to the current £260. I have advised that she attends her local CAB. She passes on her thanks to you as well as I. Cheers!
|
.... at which point the agreement possibly became either some form of secured loan (i.e., a second mortgage) or an unsecured personal loan to settle the original HP agreement and therefore early settlement is unlikely to apply unfortunately, albeit it makes it surprising that they would want/be able to recover the car directly without a CCJ in place as title should have passed to her at the same time.
NB the CAB is not known for being "nice" to its clients and may deliver harsh advice in a less than sugar-coated fashion; however it is generally worth listening too nonetheless.
|
|
Yes it does sound as if some kind of consolidation loan has been taken out to pay off the original loan in which case as protection offered by the HP agreement has almost certainly been lost.
|
|
|
...and you really get high quality lawyers, usually people
paying their debt to soceity.
|
...and you really get high quality lawyers, usually people paying their debt to soceity.
Miaow! Excellent! Mind you, at least those ones have been identified as needing to - lots of others yet to be identified!
N
|
|
Yes - sorry, I do it that's why (not for the CAB though), it was intended as a joke. In fact it's far more rewarding than paid work but doesn't pay for the toys.
|
Yes - sorry, I do it that's why (not for the CAB though), it was intended as a joke. In fact it's far more rewarding than paid work but doesn't pay for the toys.
Yes, sorry PU - I realised you were joking - so was I, not getting at you at all. I didn't mean 'pro bono' - I meant 'quite a few of your peers yet to be identified as needing to pay their debt to society' - in the more usually understood sense! (And yeah, sure - a few of mine too!)
N
|
|
|
|
|
|
