Returning HP'd vehicles after paying 50% of the finance cost has appeared in several posts recently. I thank HJ for introducing me to the concept via the FAQ and no doubt it's certainly of interest to many other people.
Does anyone know if returning a car in this way adversely affects your credit rating? Given it's a legal part of a finance agreement on any car you'd think not but the way credit referencing works it wouldn't surprise me!
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I used to work for Ford Credit Europe plc dealing with arrears collection, repos and returns (although it was a long time ago). This right, if exercised, should result in your credit history showing the loan having been repaid early at the point where you returned the car.
In theory.
I will have a dig around and see if I can find something more concrete for you.
No Dosh - but then who has?
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I was told by the finance house that it would merely be recorded as the loan having been settled early, and I've not noticed any negative affect on my credit rating
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Yup, checked it out. You do need to return the goods in reasonable condition, so if you've been carrying rolls of barbed wire around in the back seat of your merc you may get stung.....
You will need to have the finance house complete a vehicle condition report in your presence, which you will need to sign. You should retain a copy in case they try and bill you for 3 new alloys and a windscreen. Be prepared for a row over what constitutes fair condition for your vehicle, depending on the finance company and the overall state of the car.
For full details you can order a leaflet entitled "Matters arising during the lifetime of an agreement" under the heading Business Leaflets/Consumer Credit at the OFT website:
www.oft.gov.uk/News/Publications/Leaflet+Ordering....m
The important point is that you will not have your credit history "blackened". The Consumer Credit Act states clearly that "The consumer has a right to terminate the agreement *with no penalty*, once half of all payments have been made".
Hope this has helped.
No Dosh - but then who has?
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Brilliant - Many thanks No Dosh and Nick.
It was as much for everybody's benefit as it was for mine and perhaps this should go on the FAQ.
What did concern me is what if my car is in very good condition when I return it, but the finance assessor is being picky and awkward and finding imaginary problems, what kind of come back do you get? I can quite see why they'd be awkward but surely they can't stand in the way of your legal right to get rid of the car if it's okay? If they're defining "fair condition for mileage and age" as "as new" then that is hardly fair is it?
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That's why you MUST agree the condition at the point of handover.
Most companies use a fairly standard appraisal system, listing each panel / glass / light and scoring it as good, damaged repairable or damaged replace. You aren't expected to return it "as new". If you don't agree with the appraisal, document this clearly on the form. Make sure you aren't signing to say that you agree with the appraisal.
Depending on the finance company, most are quite happy for the appraisal to be done by one of their licensed dealers (Ford Credit were quite happy for any Ford Dealer to carry out the appraisal provided the location was agreed in advance). In this case you may well find that the original selling dealer will carry out the appraisal and store the car until the finance company can collect it. They don't have any axe to grind and won't bear any loss so you are likely to get a fair show.
We had numerous cases of dealers signing a "clean" appraisal for what could be best described as a motorised skip, but it was signed and that was the end of it. We had to take the loss.
Best bet is to get some photo's of your car beforehand and retain them in case it comes to a showdown.
No Dosh - but then who has?
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Just an afterthought;
The finance agreement must be a "Regulated Agreement under the Consumer Credit Act 1974" and must be secured on the goods. It doesn't apply to unsecured personal loans.
The back of the agreement will have details of your cancellation rights.
No Dosh - but then who has?
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I have returned a car under this clause only 8 months ago. I terminated the agreement as I had paid 50%. If I had traded the car in I would have been 5k down. I had no trouble what-so-ever getting finance from the same dealer, in fact the new agreement has the same clause in it!
And only last week I recieved a credit note from BMW finance for 11k and a letter to say that everything was settled and no more monies are now due.
They write the agreement so they can't penalise you for sticking to it.
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My eighteen month old Saxo went back with 60,000 miles on the clock and worth about half what was outstanding on the finance. No problems with any comeback despite the nearside front wheeltrim falling off as the guy turned from my drive onto the road.
Saved me about three thousand quid, as new prices had dropped just after I had bought it.
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I love the consumer credit act. The only draconian piece of legislation I can think of that's in our favour!
No Dosh - but then who has?
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