suppose someone has a finance agreement for a new car.

the APR happens to be 17.1% they sign up for this do the deal have the car etc...

now it is based on x many payments over 36 months plus a large final sum. payment of 40% the value of the car.

there is nothing written in the contract regarding cancelling and keeping the car.. only ending by paying the full amount or giving the car back whenever and paying half the amount?

finding the money for the final payment is going to be a problem...
so i was suggesting getting load at a lower APR to pay the whole lot off now.

but I can't seem to find anything that makes this possible except for reference to the credit act and appropriate charges??

any know the score?

 

possibly contact the finance company directly regarding this?
They can be flexible if it means they are going to get their money, as opposed to having to take your to court in x many months time for not paying your final payment?....
They don't like losing out on the interest....but sometimes they agree to it.

 

they wouldnt have to take court I dont think.

just means they have the car back as the option is chop in for new one at that point.

 

Just try the direct contact option maybe. Very easy way to find out how they see the situation. I know a fair few people who have paid these things mid-term to avoid the excess interest if they can get hold of the money etc. Are you over half term or what...?

 

OK - I assume the car is on Hire Purchase ? Let's work on that assumption. You have signed up for a credit agreement. Let's also assume the agreement is covered by the Consumer Credit Act and therefore what's known as Regulated Agreement (ie. amount borrowed is under Ł25k, if on lease terms then this will be different and I can explain further).

The letter of the law is this - is you have paid half of the agreed instalments you are legally entitled to hand the car back and walk away without any further penalty. The residual value (more commoenly known as a balloon) at the back end is there to keep the monthly payments down, you are under no legal obligation to have that as if you want to pay the whole amount off over a fixed period (known as a full payout agreement) you can do that.

If you have specifically opted for a balloon to keep the monthlies down then at the end of the agreement you have options. You can either pay the amount in full and the car becomes yours, you could vorrow money from another funder to repay the finance company and title transfers to you but you still have a loan elsewhere to pay the residual, or you can hand teh car back. Be careful - if you do hand the car back (if the option is even available) there will be return conditions attached. They will accept fair wear and tear but any excess milage (if built in to the agreement) will be chargeable. To be honest, this usually applies to Contract Hire agreements only.

Any other questions I'll be happy to help.

 

Apply for a settlement figure, when they finance company should apply the Rule of 78 and rebate of interest will be calculated. If people do have a final balloon payment, most dont realise that your monthly payment actually includes the interest on the balloon amount as well, and there is not much difference in just taking the normal HP route IMO, plus your settlement figure comes down quicker anyway useful if you went down this route in the future. Also, IMO people shouldnt take HP more than 36 months otherwise car will suffer the old negative equity!, But thats just my opinion, depends on affordabilty of course.....ooops going off on a tangent now!
I can work out settlement figures for anyone for Hp. Pers loans if interested just pm me details, i.e loan amount, monthly payment, term and number of payments made. Sorry cant do payments with balloon, contact Finance comapny for them.

Rich

 

The Consumer Credit Act has been updated and Rule of 78 doesn't apply to regulated agreements written since 31 May 2005 (GOOD NEWS!!) Instead, they are only entitled to one month's extra interest.

It does still apply to Agreements written before that date (BAD NEWS) It will come into force for these Agreements on 31/5/07 so long as the term is less than 10 years. (GOOD NEWS)

Contact the lender and ask for a settlement figure, and also a quote to refinance that over the remaining term. Then compare their cost with a loan from your bank etc.

 

 

You can also exercise your right to voluntarily terminate the agreement via your rights on 1/2 & 1/3 ..this depends on how far through the agreement you are ....

 

Mr S1..

that is the exact set up that we need to avoid.

basically my partner bought a new car before I met her on the old HPI with a balloon payment.

the car was 8.5k worth less deposits original loan was for 7.5k - by the end inc ballon payment would of paid back 11.5k due to extorniate APR rate

currently paid 4k and the car is currently worth 6.5k - if we give it back now terminating the contract - then we lose the car the 4k and also have to pay an extra 1.5k to do the 50% payment thing.

therefore my reckoning was that 7.5k loan at 17.1% APR would equal X amount of interest.

so to clear it she'd owe the interest so far plus the original amount, less payments and she could get a loan to pay off the whole lot inc the pending balloon amount.

and hopefully with lower APR now... we could get the payments similar to what she was paying and clear it in a reasonable time.


think as few have said will have to write to them and apply for settlement.

 

If you need a loan you can get cheap money these days - I'd look at it that way if I were you. If you want me to work out some figures PM me and we can sort out some numbers and I'll point you in the right direction....

 

thanks I'll try and get a statement from the finance company

its direct from the car manufacturer hence I knew she was gonna get stung lol