Any HP/lease purchase experts on here?
15 September 2002, 08:56 PM
#1
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Sorry - browser trouble!
I read a letter in the motoring section of one of the broadsheets today from a chap who wants to get a new car but is caught in a negative equity trap on his present vehicle. The columnist recommended that he write to the finance company and 'volunatarily terminate' his credit agreement and simply hand the car back. There were the usual caveats to make sure his credit rating wasn't going to be adversly affected.
Is it that simple? If so, is there any difference between a straight HP deal and lease purchase? I seem to recall a thread a while ago along the lines of providing you had paid off a certain percentage of the finance, you could then hand the car back.
Any feedback much appreciated.
Cheers
Kav
[Edited by kav - 9/15/2002 9:02:37 PM]
I read a letter in the motoring section of one of the broadsheets today from a chap who wants to get a new car but is caught in a negative equity trap on his present vehicle. The columnist recommended that he write to the finance company and 'volunatarily terminate' his credit agreement and simply hand the car back. There were the usual caveats to make sure his credit rating wasn't going to be adversly affected.
Is it that simple? If so, is there any difference between a straight HP deal and lease purchase? I seem to recall a thread a while ago along the lines of providing you had paid off a certain percentage of the finance, you could then hand the car back.
Any feedback much appreciated.
Cheers
Kav
[Edited by kav - 9/15/2002 9:02:37 PM]
16 September 2002, 09:35 AM
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Yes this is entirely possible. The consumer credit act allows you this facility to hand back the vehicle with no further penalties provided 50% (I think) of the total amount borrowed has been re-paid. It may even be as low as 30% but you will need to check the fine print on any agreement. As for an adverse credit rating, well you may be able to do this but it doesn't mean the finance companies have to like it, so chances are it will registered in some form or other as a black mark against your name.
Now the above certainly stands for HP agreements, and should also stand for a lease purchase , but the important thing to remember here is the 50% threshold, it is not 50% of your repayments but 50% of the total borrowed, If you've offset 50% of your borrowings until the end of the term, then you are stuck. But again check the fine print in your documents.
For those not understanding the term, lease purchase works like a PCP with an amount offset to be re-paid at the end of the loan term. But their is no GMFV and no protection in place to allow to just hand the car back and walk away, the amount outstanding has to be paid, regardless of the car's eventual value. This totally different from lease, as with a lease you don't eventually own the car, it is always the property of the leasing company, and will be returned to them at the end of the term.
Now the above certainly stands for HP agreements, and should also stand for a lease purchase , but the important thing to remember here is the 50% threshold, it is not 50% of your repayments but 50% of the total borrowed, If you've offset 50% of your borrowings until the end of the term, then you are stuck. But again check the fine print in your documents.
For those not understanding the term, lease purchase works like a PCP with an amount offset to be re-paid at the end of the loan term. But their is no GMFV and no protection in place to allow to just hand the car back and walk away, the amount outstanding has to be paid, regardless of the car's eventual value. This totally different from lease, as with a lease you don't eventually own the car, it is always the property of the leasing company, and will be returned to them at the end of the term.
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