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Ending A Hire Purchase Agreement Early


Cresta Fiesta
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In the UK, if you have a car loan, you can give the car back to the finance company once you've paid off half the total loan figure, irrespective of the value of the car itself, it must be in 'reasonable condition' for its age though.

 

It's a little known clause in the 1974 Consumer Credit Act, which needless to say finance companies don't shout from the rooftops about.

 

You can also give back the car plus enough cash to make up half the total loan figure, and end the agreement in the same way.

 

I'm going to try the OFT but just wondered if anyone here can advise if the situation is the same on the IOM?

 

I do personally know someone in the UK who's done this with two cars, both of which were in pretty heavy negative equity when he gave them back.

 

I'm nearly halfway through a £10K car loan, the car is worth rather less than £5000, I'd be quite chuffed if I could just give Conister the car back and get something else! (And I don't think they've done too bad out of the deal anyway, considering the chuffing interest I've paid them over the last three years! And on my other car loans before that over the years.)

 

Can anyone advise? Thanks!

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I was under the impression they didn't do hire purchase anymore.. just loans and personal loans which would have different terms and conditions.

 

Hire purchase is basically rent with the option of buying isn't it?

 

This is an excellent point, well made.

 

Although it's conceivable the 1974 act still covers loans I suppose.

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In the UK, if you have a car loan, you can give the car back to the finance company once you've paid off half the total loan figure, irrespective of the value of the car itself, it must be in 'reasonable condition' for its age though.

 

It's a little known clause in the 1974 Consumer Credit Act, which needless to say finance companies don't shout from the rooftops about.

 

You can also give back the car plus enough cash to make up half the total loan figure, and end the agreement in the same way.

 

I'm going to try the OFT but just wondered if anyone here can advise if the situation is the same on the IOM?

 

I do personally know someone in the UK who's done this with two cars, both of which were in pretty heavy negative equity when he gave them back.

 

I'm nearly halfway through a £10K car loan, the car is worth rather less than £5000, I'd be quite chuffed if I could just give Conister the car back and get something else! (And I don't think they've done too bad out of the deal anyway, considering the chuffing interest I've paid them over the last three years! And on my other car loans before that over the years.)

 

Can anyone advise? Thanks!

 

I advise you to study your morals.

'I want everything for nothing' is written all over you and you seem quite happy with it.

I bet you claim on your insurance every year to make sure you recover the cost of the premium.

Dross.

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In the UK, if you have a car loan, you can give the car back to the finance company once you've paid off half the total loan figure, irrespective of the value of the car itself, it must be in 'reasonable condition' for its age though.

 

It's a little known clause in the 1974 Consumer Credit Act, which needless to say finance companies don't shout from the rooftops about.

 

You can also give back the car plus enough cash to make up half the total loan figure, and end the agreement in the same way.

 

I'm going to try the OFT but just wondered if anyone here can advise if the situation is the same on the IOM?

 

I do personally know someone in the UK who's done this with two cars, both of which were in pretty heavy negative equity when he gave them back.

 

I'm nearly halfway through a £10K car loan, the car is worth rather less than £5000, I'd be quite chuffed if I could just give Conister the car back and get something else! (And I don't think they've done too bad out of the deal anyway, considering the chuffing interest I've paid them over the last three years! And on my other car loans before that over the years.)

 

Can anyone advise? Thanks!

 

I advise you to study your morals.

'I want everything for nothing' is written all over you and you seem quite happy with it.

I bet you claim on your insurance every year to make sure you recover the cost of the premium.

Dross.

 

Meh, Conister have had interest payments off me in the long thousands of pounds over the years (I've had finance with them in one form or another since the mid 90s), I've never missed a payment and never dicked them about, if this is a clause that's written into the legislation that covers loans, then where's the immorality with invoking that clause? It's not like the car is a shit-tip, it's been well looked after and properly serviced, but it is worth less than the outstanding loan amount, after Conister have sold it on they'd still be thousands of pounds to the good overall.

 

And just for the record, I've never made an insurance claim for anything, ever.

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If you owe them more than the car is worth, I really don't see how they would be thousands of pounds to the good. You do remember they gave you 10,000 pounds originally, right?

 

And just because you've spent a lot of money with them previously, doesn't mean you get to rip them off later. Legal or not, the whole thing sounds morally repugnant and completely lacking in any sense of responsibility. Were you really that stupid that you didn't understand that a car's value will depreciate over time?

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First most sales not with banks are leasing or condituional sales agreements rather than true HP agreements

 

Second we do not have the 1974 Act here, we do have some of its provisions

 

SEctrion 5 of our 1939 Act says

 

5 Right of hirer to determine hire-purchase agreement

(1) A hirer shall, at any time before the final payment under a hire-purchase agreement falls due, be entitled to determine the agreement by giving notice of termination in writing to any person entitled or authorised to receive the sums payable under the agreement, and shall, on determining the agreement under this section, be liable, without prejudice to any liability which has accrued before the termination, to pay the amount, if any, by which one-half of the hire-purchase price exceeds the total of the sums paid and the sums due in respect of the hire-purchase price immediately before the termination, or such less amount as may be specified in the agreement.

 

Which is not quite the same in terms of what you have to pay to ditch the ggods

 

There is nothing immoral about it. The item is rented to you and the HP Compnay then has the item to sell to ca over any outstanding balance

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Moral issues aside (and for the record, I think you'd be morally wrong to do it), you could find yourself worse off if you do it anyway. The most depreciation you'll get in a car is in the first 5 years, after that it levels out considerably. By the time you've finished paying it off, you'll still have an asset which you might find you'll need, especially if you find yourself in a position where you can't afford to buy another car. Hand it back and you'll have just pissed away several grand with nothing to show for it. Couple with the fact that used car depreciation is slowing considerably at the moment (most cars have gone up in the books at least a grand this year) and is likely to remain low for at least the next year you'll probably find you've not done as badly as you first thought.

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If you owe them more than the car is worth, I really don't see how they would be thousands of pounds to the good. You do remember they gave you 10,000 pounds originally, right?

 

And just because you've spent a lot of money with them previously, doesn't mean you get to rip them off later. Legal or not, the whole thing sounds morally repugnant and completely lacking in any sense of responsibility. Were you really that stupid that you didn't understand that a car's value will depreciate over time?

 

Well the payments on a loan are weighted massively towards interest in the first couple of years, so they've had all that off me, the car is still worth about £4.5K on the books (which is surprising I admit, last time I checked it was closer to £3.5K but apparently certain used car values have done very well in the last year and my car is one of them), so overall Conister would be comfortably in profit on the whole deal.

 

'Morally repugnant' is a bit harsh, what the international banking system has done to every tax payer in the western world is morally repugnant, invoking an entirely legitimate clause in a piece of legislation to give a car back to a finance company falls a bit further down the scale I'd suggest.

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Well the payments on a loan are weighted massively towards interest in the first couple of years, so they've had all that off me, the car is still worth about £4.5K on the books (which is surprising I admit, last time I checked it was closer to £3.5K but apparently certain used car values have done very well in the last year and my car is one of them), so overall Conister would be comfortably in profit on the whole deal

 

I don't think you really understand the maths here.

 

Conister don't give you 10,000 and then you give them back 10,000 as you've already pointed out. That extra interest provides them with their income to pay wages, rents, rates, overheads and set aside a small amount of profit. The amount of interest you pay is calculated to provide them with all those things.

 

If you're due to pay back 15,000 over the course of the loan and you've only paid back half. If you then give them back a car that's worth 6000, you leave a shortfall. Insert your own actual figures there but can't you see where the deficit is?

 

And have you really got a compound interest car loan? Really?

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THe legislation is a consumer protection measure so using it can hardly be described as immoral or morally repugnant

 

Given the length of a typical HP agreement ie 3, 4 or 5 years you will have paid a deposit and half the installments before you can hand back afterr 1.5, 2 or 2.5 years You escape the payments but you lose use of the vehicle. Conisterfr loses the installments but sells the vehicle, probably for more than is owed on it

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Well the payments on a loan are weighted massively towards interest in the first couple of years, so they've had all that off me, the car is still worth about £4.5K on the books (which is surprising I admit, last time I checked it was closer to £3.5K but apparently certain used car values have done very well in the last year and my car is one of them), so overall Conister would be comfortably in profit on the whole deal

 

I don't think you really understand the maths here.

 

Conister don't give you 10,000 and then you give them back 10,000 as you've already pointed out. That extra interest provides them with their income to pay wages, rents, rates, overheads and set aside a small amount of profit. The amount of interest you pay is calculated to provide them with all those things.

 

If you're due to pay back 15,000 over the course of the loan and you've only paid back half. If you then give them back a car that's worth 6000, you leave a shortfall. Insert your own actual figures there but can't you see where the deficit is?

 

And have you really got a compound interest car loan? Really?

 

I know that in the first 18 months to two years or so the actual amount I'd paid off the loan was very little, literally just a grand or so, despite having made payments of many thousands of pounds, I got a 'flat rate' loan which is apparently stupid and I should have got a normal APR loan or something, not that the lovely people at Conister explained that to me whilst eking out their tiny profits from the benevolent transaction.

 

If I were able to give them the car back at this point (which isn't clear anyway), I don't think they'd end up making a loss on the deal once they'd sold the car on. Besides which, if they don't like the terms of the legislation that covers these agreements, no one is forcing them to lend the money out under that legislation, are they?

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THe legislation is a consumer protection measure so using it can hardly be described as immoral or morally repugnant

 

No I must accept that I am the demon spawn of Manson and Fritzl, for daring to consider using one of the rare pieces of financial legislation that's actually geared towards a bit of consumer protection and rights - now if you'll excuse me I'm off to rape some kittens and eat their livers.

Edited by Cresta Fiesta
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Why don't you just sell the car and pay off the loan then if you don't think they'll make a loss. Same difference, right? And you get to keep your credit reputation with them.

 

Anyway, sounds like your loan isn't covered. Good.

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