Hi
I bought a new car before Christmas. I made the purchase based on the knowledge that i would be receving a lump sum of money in January. Unfortunately that fell through and i am now struggling to pay and the car costs me a fortune in fuel.
The arranagement in place is a credit agreement backed by a bill of sale, so is NOT a hire purchase arrangement. My understanding is that with this kind of arrangement, i actually own the car?
Because i did not receive the money i was expecting, i have been left with a number of debts that i need to clear, so i thought of selling the car and paying off my debts which would make it easier for me to pay the car finance company every month, so essentially it becomes a loan rather than car finance.
Im not sure of the legalities, but surely if i continue to pay the company as i would if i had the car that would be ok?
If i did sell the car and for some reason i had done something illegal, what would the implications be? I presume i would just have to pay the money back, which is what i would anyway?
Thanks
Edited by nikkikitch on 27/01/2010 at 20:45
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Anyone doing an HPI check on this car may find there's outstanding finance and avoid buying it.
I suggest you talk the car finance company.
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I worked in motor finance for a number of years. We used straightforward Hire Purchase agreements, but I am aware of other finance providers who use Bills of Sale. As I understand it, a Bill of Sale doesn't give the same rights under the CCA for early settlement and rights of reposession.
I would imagine you will not be able to sell your car without paying the finance off. Having said that, it didn't stop a number of our customers from doing just that. It was then up to us to decide if the purchaser was 'innocent' and if we could terminate the agreement and take legal action to recover our money.
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Might be worth popping to your local citizens advice with the paperwork so they can give guidance on your specific agreement.
My understanding is a bill of sale type of finance on a car is usually when your credfit rating is poor and the company offsets their risk by very high interest rates (I've just seen one on a search of 44.9% APR !) and punative default terms. Also it seems they may not be a conventional hire purchase agreement but in fact they could have even greater rights to reposess the car. Further that the type of companies that use these agreements use hard sell when you take them out and very aggressive debt recovery methods/baliffs when it goes wrong.
Seems once you cross them they will come after you for the full sum (I'm guessing the car was sold at an inflated price), all the interest plus default charges you signed too but probably never noticed.
The only glimmer of hope is that it's said many of the companies that sell you bill of sale finance don't set the agreement up by the strict procedure the law demands and you might be able to fight them on this loophole. Having said that it will be an uncomfortable process you may not want to go through.
From the circumstances you present it really does sound like a citizens advice debt advice service is most appriopriate.
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The short answer is that the Bill of Sale is designed to make your car security for the loan. If they've done it properly, the car isn't yours to sell.
As M.M. says, it's not typically the most favourable loan arrangements that are made this way and it's normally associated with sub-prime lending, high APRs, and punitive default charges.
It's possible they haven't set up the arrangement compliantly which might help you. You need to get advice, quickly. CAB would be a place to start.
Edited by Manatee on 28/01/2010 at 08:25
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