17 March 2015 at 7:22 am #65275
I am 6 months into a five year Hire Purchase agreement on a Toyota GT86. I initially bought it used, so it won’t have depreciated much from the value that i paid since i purchased it
My initial cost of insurance was 1.2k. The cost for renewal with recent endorsements will be more than double – combined with some subtle financial changes in my life and decision to prioritize saving for my future over having a nice car far exceeds the amount that i could afford to pay per year. Therefore i simply cannot afford to keep this car (my pride and joy) This is incredibly devastating and upsetting, and now i have further fears that are turning devastation into nightmare. Incredibly stressful and causing me a great deal of anxiety, unless someone can tell me that i have been given the wrong impression..
It is to my understanding that i have the option to VT. However, i am reading that in order to do so i will end up being liable for the remaining outstanding balance up to 50% of the cost of the vehicle, this is figure likely to be roughly £7000.
Now here’s what i simply don’t understand. Obviously the car will be sent to an auction of some kind, and given the fact that it won’t have depreciated much in value it will sell fairly close to the initial cost that i paid. Here is my main question.. Does the amount the finance company receive for the vehicle get taken off this 50% that i am liable to pay? Ie does any money made during the sale of the vehicle past the 50% that i am exempt from paying then go towards the final 50 that i am liable for? Or do i still get billed this amount regardless? Essentially making me pay a huge sum of money for the next 2.25 years for absolutely nothing ??? So they are stealing 7k from me, making the money off this vehicle. Money that i could have made from the sale and paid towards the final 7k myself???
I pray that somebody could shed light on this, because if that IS the case, then i literally feel as if i’ve been stolen from. Bearing in mind that 7000 is far larger than any amount of money that i’ve ever saved in my life. And it will cripple my life to the point of preventing me ever owning another car in the near future, or being able to save for a mortgage? (im in my mid 20s). Furthermore, this 289pcm for the next 2.25 years would be the cost of fuel and insurance on a cheap banger that would suit my situation.
Somebody relieve me of my fears, or suggest a feasible option/way out that will enable me to get out of paying for absolutely nothing for the foreseeable future.. please tell me that i have the wrong end of the stick. And not paying for 2.25 years worth of car that i wont be getting 2.25 years of use out of!! If that’s the case i am shocked that it’s legal for a creditor to do this to a customer. Essentially i’d be restricted of doing something that would be easily done if the vehicle was legally allowed to be sold by myself??
17 March 2015 at 1:55 pm #65276
Have a read of the article here about Voluntary Termination. You are incorrect about the amount to pay – you have to have paid off 50% of the Total Amount Payable (and not 50% of the cost of the vehicle, as you mentioned) to VT the car. The Total Amount Payable is the amount you borrowed, plus all interest and fees payable.
Given that you are only 6 months into a 5 year HP, you are a long way from the VT point, which you are likely to hit after about 2.5 years, so it’s probably not feasible for you. You are better off selling the car and paying off the finance (see this article about settling your finance early – it’s specifically about PCPs but the same thing applies to HPs). You will probably have a fair amount of negative equity to settle (since your current settlement will probably be more than what you initially borrowed, as you are only 6 months into a 60-month agreement, and you car will definitely be worth a lot less now than when you bought it).
I’m not sure why you’re upset or feel that you’ve “been stolen from”. You borrowed a large chunk of money to finance a car, and 10% of the way into the agreement you have decided that it was the wrong idea. Unfortunately, you still owe the finance company their money and you will have to pay it back. Voluntary Termination isn’t going to help you so soon into your agreement, so you’re better off selling the car, paying off the finance company and swallowing your losses.
19 March 2015 at 11:52 am #65303
OP you are clearly delusional. And your ‘decision to prioritize saving for the future over having a nice car’ is a laugh. Maybe you should just admit that your an idiot for buying a car you can’t afford and are now looking to get out of it without paying back what you owe. Please don’t procreate and bring more irresponsibility to the planet.