Dealership cancelling finance, need advice on where I stand with negative equity

[Lisa Nield]

Long story short, I part exchanged a Volkswagen Beetle which had £8600 outstanding finance, dealership gave me £5600 (£3000 neg eq) They put this onto my new car.

Had some issues with new car (6 weeks after buying it) They have stalled in doing repairs, came to blows over the weekend and the directors wife said she was cancelling the finance agreement (I wasn’t aware this could be done) spoke to finance company and credit broker and they have both said if all parties agree this can be done.

I am happy to cancel as the garage are a load of cowboys and I don’t want any dealings with them. One problem is the negative equity! Which stands at £2600. The beetle I part ex has been sold for £7995!

I don’t agree with paying the neg eq back as the car we traded it would never of been traded in if we knew this would happen! So in reality the dealership has has a £5600 they have sold for £7995 and also the car back which we bough of them.

Is it worth seeking legal advice over this issue, or maybe even a small claims court? Any advice would be amazing as I am really at a loss here :(

[Stuart Masson]

Hi Lisa. Firstly you will need to speak to the finance company to make it clear that you did not agree to cancel the finance agreement. A dealer cannot cancel your finance agreement without your consent (it’s nothing to do with them).

With regard to your negative equity position, it may well depend on how the contract was written up. You will need to speak to a consumer lawyer, who will be able to look over all of the paperwork and advise you on where you stand.

Don’t be confused between your car’s part-exchange price and its sale price. The dealership’s profit comes from selling cars, so they’ve bought your car for £5,600 and then had to add all their costs of doing business (rent, salaries, electricity, plus any preparation costs, warranty, etc). They’ve advertised it for £7,995 but you presumably don’t know what they actually sold it for, so they’ve probably made far less profit than you are imagining.

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