chrisa3

iTrader: (1)

Im after someones advice. Someone I know bought a Focus ST just over a year ago from a Ford Dealership. He px a car with some negative equity and took out the Focus on finance throught the dealership. Basically, he has landed on personal problems at home and also lost his job a while ago. Although hes back in work at the minute, hes struggling with the payments on his finance.

He contacted the finance company to discuss his options with regards to handing the car back, getting out of the agreement. But Santander have told him the finance agreement is a personal loan, and they have no interest in the car he bought from the Dealership. Now I may be wrong, but is this not wrong of the garage to do this?? I was under the impression that garage finance was Hire Purchase, ie the cars not yours until a set number of payments has been settled. It looks as though the garage has arrange a personal loan for him, and he wasnt aware of this, and thought it was an HP agreement.

Has Anybody got any knowledge is this area and may be able to offer a little advice.

thanks

focusv8

So it's an unsecured Personal loan with Santander, who have no claim on the car?

If it's HPI'd it should show clear then?
If it's not clear than someone has an interest/claim.
Does his paperwork mention H.P?
Did he do the deal and sign at the dealers, all on the same visit?

Has he contacted the dealer?

chrisa3

iTrader: (1)

According to Santander its a personal loan and they said they have no interest in the car.

He hasnt done an HPI check yet.

Not sure about paperwork as I havent seen it.

He did the deal at the dealers and signed for everything there and then.

He hasnt contacted the dealer yet as im trying to get some info before we proceed. Im going to have a look through his docs over the next couple of days.

pani_k

iTrader: (1)

If they have just arranged a personal loan then ultimately shouldn't the car be his? So he could sell it if he wanted?

jamie956

What is your mate trying to acheave?

Rick Astley

Sell the fucking car. It is not rocket science.

Robs Frst

Was thinking the same thing.

MadMac

Was it a deal arranged though Santander Consumer Finance or Santander the Bank?

Sounds like the bank rather than the Finance, in which case it was an unsecured personal loan to your friend and not against the car.

Bottom line, he is responsable for the loan and needs to raise the money to pay for it himself.

So yes, sell the car.

chrisa3

iTrader: (1)

Thanks for the input, I never thought of that before you mentioned it . As i said, the cars got negative equity on it so its not worth the settlement figure. With HP agreements you have the option of terminating the agreement as the cars not technically yours.

Im trying to help him out. Yes he should have checked etc, but the point im trying to get across is that the garage told him it was HP, yet santander are saying its a personal loan. If its a personal loan, surely the garage cant arrange this on his behalf or can they?

Surely if your buying a car from a Ford Dealership, the finance company is paying the money to the garage for the car they own.

If its a personal loan agreement between the finance company any him and it has nowt to do with the car, then surely the garage has no place in applying for loans on behalf of customers without there prior notice or fully explaining the terms.

The bottom line is, he cant sell it as its not worth what he owes. But because its not HP as he thought, he cant hand the car back.

dojj

iTrader: (3)

sell the car, pay the lump sum back to the loan company, cover the rest as and when

MadMac

THis, at least it will give your friend an easier time trying to meet the remaining repayments because they will probably keep the term the same.

chrisa3

iTrader: (1)

thats what I told him but, hes got himself in a right pickle, as its about Ł5k short. Hes fucking stupid for getting himself in the situation and hes shit with money etc, but from a finance point of view, usually HP companies wont lend over and above a cars value by that much, and im wondering whether the garage have been a bit naughty and mis-sold the finance just to get the sale. Obviously an unsecured loan wont take into account the value of the goods.

for example, i think the car was Ł15k but the garage allowed him to trade a car he owed Ł3.5k on making the loan amount Ł18.5k on a car that was listed as Ł15k.

MadMac

So he did actually buy the finance from the garage? Interesting.

So he traded in his car, of which he had finance outstanding?

So he first of all got the finance - the trade in value of the car = Ł3.5k?

Then bought a new car of Ł15k on finance, added his remaining Ł3.5k making it Ł18.5k?

So he had car finance for a car at 125% Loan to Value??

Is he fucking mental????

Sorry mate, but its people like this that dont think their finance through properly that started the whole credit crunch.

I mean of course the garage is going to push the finance if they can get it agreed, because thats how they make the money. And its not going to mean shit to them if he can't pay it in x time, they have sold the car, making a profit, sold his traded in car, making a profit, and got commission for the finance agreement! Its your mate and the loan company that is going to have to sort it out.

But at the same time, I am quite confused, as you cannot get HP for greater than the value of the car. I am pretty sure that this is a cash bank loan and the bank just extended his loan.

I'd be happy to look at the agreement your mate has signed if he wants to scan and e-mail it to me?

Ollie.

This happens a lot. I havent worked in a main dealer for over 4 years now but it was common then. Pretty certain its the customers fault for not reading the documents carefully as its stated on the very front page and once signed and the proofs are sent its done and dusted.

Sell the car and deal with whats left. He has no other choice. Even with a finance agreement you can only hand the car back after 50% of the full balance has been paid so he couldnt have done that anyway.

MadMac

So if I understand this.

Jo Customer goes buys a car on finance for say 5 years.

On the 3rd year the dealership will ring up said customer and say do you want a new car.

Sell new car to Jo Customer with a new 5 year finance deal, even if the new deal means the customer is MORE in debt than before or looses out on the trade in?

Ollie.

Again i havent been in a main dealer for over 4 years but you used to get up to 120% of the cars value to allow for some neg eq.

trev1964

If it was the deal as described, he wouldn't get finance at those figures, hence a personal loan.
Standard practice in my years in sales, but he should have been told.
At half the total figure payable under a finance agreement he would have the right to hand it back and walk away as you say, unfortunately with a personal loan he is screwed in that respect.
Not sure what he can do to be honest.
Selling the car isn't going to help..

MadMac

This is why my finance guys dont touch luxury cars anymore

MadMac

Sorry, but 120%? That does make me angry, how can, anyone provide finance for something greater than the value of what the cars worth?? Its just asking for trouble.

This is exactly why the credit crunch happened. All these banks lending loans out to people of greater value than what its worth and then people not being able to pay the money back, or are the banks able to recoupe the cost by taking back the asset.

dojj

iTrader: (3)

buying a car on finance is the biggest mistake ever

you end up paying more than the car is worth and when it comes to selling it, it won't be worth half as much as you've paid out

and you're stuck with it for years

i can't extend any sympathy to him for getting himself into this pickle, but the first bit of advice you should be giving to him is to not sign any more bits of paper without thinking about it first and then getting a second onion

chrisa3

iTrader: (1)

Exactly why i am pissed off a bit. He was forced to change the car due to marital probs. Hes not the sharpest tool in the box when it comes to finance etc and I would probably say hes easily led.

The bottom line is its his own fault. But again, fucking dealerships dont give a fuck about how they get their money, even pushing the boundaries of whats legal or ethical doesnt seem out of their reach.

There should be a law brought about to stop things like this from happening. there is no way that a garage/finance company should be lending money to finance a car above its actual value. IMO they have obviously known the HP agreement would be refused and put it through as personal finance without it being explained to him.

I guess hes just gonna have to bite the bullet and take it as a lesson learned. I just didnt know if there was any mileage in getting trading standards or the financial ombudsmans take on the situation.

Iain Mac

If the loan complies with the Consumer Credit Act, there is nothing they can do. In big writing on the front page and in various other locations and smaller print throughout the agreement the name of the finance product will appear. eg Hire Purchase Agreement, or Personal Loan Agreement or Conditional Sale Agreement.

If the loan is unrelated to the car any loan to value is completely bogus. The ONLY things the loan company is concerned with on personal lending is whether the customer can & will make the payments.

Besides which, the minute a new car (or many used cars) drives away, the value drops. What do you propose for loan to value then?

And how do you think any legislation could be enforced? Back in the day when there were credit controls in place we financed a lot of "holidays" or "furniture" even though we knew full well that the real purpose of the loan was to buy a car, simply because the deposit requirements didn't apply.

Personally, I think there should be a test of reading and comprehension - if someone can't or won't read the agreement being put in front of them they should be automatically precluded from entering into the agreement that it contains!

pee vee

If its a personal loan, then he could sell the car for all he can get, (as its not actually on finance) and at least use the capital to pay off the montly payments, and just hope he has got a job when the dosh runs out!

B19LRW

Stu- do you work for a bank then?

Cossie Sean

common place for chuckie companys now to give personal loans and not secured on the car as people keep fucking them off like this, simple, 3-6 months of IVA then bankruptcy.

been there and done that

All good now

Stevie-Boy

It's not down to the garage to determine if it's HP or a personal loan,the garage will propose it as HP and the finance company will determine whether to flip it onto a personal loan or keep it as HP they look at risk in deal. As for "sell car it's not rocket science"even though car is bought on personal loan it will still have an HPi marker against it until that loan is settled.
Take it from one who knows. As for 120% of value again finance company will in some cases look at risk against ability to repay and will accept this.There are a few ways to finance negative equity.As long as the punter knows they can't get out the car they are buying till they are at least two 3rd's through the term then it's fine it's when they are not informed of what they are actualy doing that's fucked up and bang out of order. There are a few ways to finance negative equity and in most cases it's fine. You would be surprised at some of the finance options that are fired into customers and not explained.
What was the garage in question?

NitroSi

It's simples, the dealer told the finance company that the car was worth Ł18.5k

Sell car, pay off what you/he can and then re-finance the difference thus giving you/him a lower payment amount

Stevie-Boy

Duplicate post

Stevie-Boy

You can sell car and give money to finance company and they will either reduce term or reduce payment.

chrisa3

iTrader: (1)

The garage was Arnold Clark. I agree with all the negative posts, but the guy in question is my brother. So even though I agree, its hard to read some of the responses, when I appreciate theres probably not a lot he can do.

What is pissing me off, is that I have personally witnessed on several occasions the amount of shite that car salesmen can talk in order to get a sale. Some will try anything to get people signed up to finance. They cant give you definative APR rates and blind people with monthly/weekly payments.

With regards to enforcing laws against it, i was talking about restrictions on HP companies lending more than a car is worth, and garages fiddling retail prices to get deals pushed through. Its the same as lending mortgages against a house which isnt worth what people are borrowing. If its not an HP agreement and secured on the car, then garages shouldnt be selling unsecured products against high value items without explaining to the customer that its unsecured and a personal finance. As said there is a big difference. This wasnt explained at the time of the sale.

Anyway, its been an interesting read. I think hes just gonna have to sell it and pay the majority off to get his payments down. A expensive lesson for him to learn.

RS Grant

iTrader: (1)

That's what I'd do... phone them, tell them what you're planning to do and the sort of figure you're likely to get from selling the car (be realistic, don't over price it and wait for months to shift it) and ask what your options are once you have the cash. In your brothers position, I'd be trying to keep the same term but spread the remaining negative equity over the period which will reduce his payments to a manageable level.

If they're unable to do that and will swallow the lump sump but demand the same monthly payment amount until the loan ends then look at finding finance through his bank to cover the smaller outstanding amount... which will give him the reduced payments that way.

Doesn't surprise me... I briefly worked for AC and the selling techniques they teach are gently yet aggressively persuasive, but effective. I'm 99% sure there is no way he can get out of this agreement by a loophole, he's going to have to take his medicine and hopefully learn a valuable lesson.


Cheers,
Grant

12340987

deleted

chrisa3

iTrader: (1)

The best technique I encountered was at my local VW garage a few weeks back. I was looking at a passat Estate. I told them i wasnt interested in finance and it would be cash. they offered me Ł2k under book for my focus, then tried bombarding me with finace figures, gap insurance, PPI etc even after I already told them i wasnt interested.

I said i wasnt willing to loose that amount on my trade in, and wanted a bit more or some money off the VW, and the response was "all that matters is that this is the car you want!" excuse me..."Well the figures will work themselves out, but what matters is if this is the car you want?" WTF are you on about.. All wanted to know was price to change, the cost of the VW minus the cost of mine = ??? In the end I was like fuck this.... im off.

MadMac

Agree with what you are saying here, but loans from the bank are cash loans, ie you get the money, you are entitled to spend it on anything you want. Which is function of these types of loans. Finance, or HP, is for an Asset, and the finance is secured against that asset. So in your first example it was a cash loan which is what you get from the bank, but that's being lent to you as a person. Rather than with the backing of an asset.

And if you get a cash loan from the bank all of them are now obliged to read a set script and highlight all the key facts in plain English, banks have to or the advisor would loose their jobs because of it. But that's banks, other lenders, probably don't do the same thing

Yep, business manager for small and start up businesses.

What I don't get is, we are strict with the loan to value when it comes to mortgages, but on cars and other equipment, we are shit.

Stevie-Boy

The other side of the coin is mate that if your Bro never started to have difficulty makin his payments then it wouldn't be an issue.He bought a car he loved and if it wasn't for someone blowin up his figures to get it financed then he would not have got the car. I sell used cars for a Ford main dealer and i get deals with negative equity passed on a regular basis,there's a difference though. I get punters who have been well and truly bent over a desk and raped by salesman and lowlife business managers who will do anything for a deal. I will tell them i will get them out the car they hate and get them into something they will like but i do stress that they will need to stay in the car for at least two 3rd's of their finance if they want to clear there negative equity they have carried over and not try and change it. People have negative equity for 2 main reasons,they fuckin hated a car they had bought previous and changed it too soon or they were raped by a salesman with all sorts of add ons on their finance. Good luck mate. You would be surprised how much you can get financed on a car over the book price but of course it's dependant on the punters credit rating.