"Half rule" hp agreement

dmrules · 24-06-2009 4:25am #1

Hi all, i know that this topic has been talked about before but has anyone done it recently? I rang financial regulator yesterday and was told that my credit history wont be affected by doing this. Should i hire a soilcitor or can i do it myself? Any opinions...

thanks

Victor · 24-06-2009 4:33am

dmrules wrote: »

doing this.

Doing what? If you explain things a bit more, people can help you more.

dmrules · 24-06-2009 4:49am

Victor wrote: »

Doing what? If you explain things a bit more, people can help you more.

Giving the car back under "half rule" after paid half of the hp amount...

Mena · 24-06-2009 8:42am

I've done it recently. After paying for my 06 325i for almost three years I decided enough was enough. I'd already gone over the 50% mark.

All I did was contact the bank, say thanks very much (in writing), agree on where to hand the car back and it was done.

No need for solicitors etc.

They did at first pretend not to know anything about the half rule though, and I got 4 calls after the fact asking where I had actually heard about it, from some very concerned senior managers at the bank.

My credit rating is still perfect, in fact, I topped up a loan just the other day to get the wife a car.

Drummerboy08 · 24-06-2009 8:50am

I'm still not fully up to speed on this. Does this cover all banks or just certain lenders? Would a HP agreement have a clause in it preventing this?

Mena · 24-06-2009 8:53am

It only applies to Hire Purchase agreements, no other type of agreement. And the agreement can have a clause in it, but it would mean nothing, as the Half Rule is enshrined under Irish Statute.

Google (if I recall correctly) "The Hire Purchase Act of 1946".

Here it is

Redsoxfan · 24-06-2009 9:01am

Hire Purchase Act 1946

The relevant section

5.—(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.

(I can see why someone would feel the need to consult a solicitor!)

Mena · 24-06-2009 9:10am

Redsoxfan wrote: »

(I can see why someone would feel the need to consult a solicitor!)

So do I, but trust me, it's a waste of money

cogITere · 24-06-2009 9:25am

You can terminate a (consumer hire purchase) agreement at any time by either settling the deal (pay in full) or using the "half rule". Neither method will affect your credit rating.

Half Rule:
Pay half the amount of the total hire purchase price* (if the total of instalments already paid have not reached that amount) and return the goods to the Bank. If the goods in question are damaged in any way (excess mileage, excess wear & tear, crashed, etc), you will be liable to pay the difference between reasonable market value and price asset sold for.

* check your agreement as total hire purchase price does not always equal half your instalments, can sometimes be more and a lot of times be less (if deposit / upfronts payments made).

Once upon a time your credit rating was flagged of the Voluntary Termination (VT), but no more. When you clear your loan through this method, a Clear (C) code will be the last profile on your rating.

"NOTE, if you (have been) in arrears and reported as such with the Irish Credit Bureau, these codes will remain but the act of VT will NOT in any way affect your credit rating."

.Longshanks. · 24-06-2009 9:47am

Very interesting. Knew that it could be done in UK but not here...

Drummerboy08 · 24-06-2009 9:55am

So in other words, say with a 48 month term, once payment 24 has been made, the vehicle can be handed back, and the loan will be cleared??! Sounds too easy to me...

deRanged · 24-06-2009 10:05am

if you look in your HP Agreement (when you read it before signing of course)
you'll see the figure mentioned as the amount you need to have paid before you can hand back the car.
it's not necessarily payment 24 of 48.

Sponge Bob · 24-06-2009 10:17am

Drummerboy08 wrote: »

So in other words, say with a 48 month term, once payment 24 has been made, the vehicle can be handed back, and the loan will be cleared??! Sounds too easy to me...

That is actually the case on certain types of Hire Purchase and Finance .

Once half is paid you may hand back the asset ( car or van) to the Finance Company and you need not think about it ever again, their problem.

T&C's apply of course and consulting with a solicitor would be advisable in most cases . EG do you have to pay half the principle or meet half the payments due under the term ....they are 2 different things !

If you get away with it then please tell us what the clause actually says in the contract and which finance institution it was and whether you paid half off or made half the payments.

Mena · 24-06-2009 10:17am

Drummerboy08 wrote: »

So in other words, say with a 48 month term, once payment 24 has been made, the vehicle can be handed back, and the loan will be cleared??! Sounds too easy to me...

Technically yes. But you must add in any deposit you paid and any documentation fees. Also, you could have a balloon payment on the car so that must be taken into account.

It is that easy.

Sponge Bob wrote: »

If you get away with it then please tell us what the clause actually says in the contract and which finance institution it was and whether you paid half off or made half the payments.

It's 50% of the total value of the agreement. I was with PTSB Finance. There is no clause relating to this on the HP Agreement, they sure as hell don't want people realising this can be done.

Sponge Bob · 24-06-2009 10:30am

IIRC I was told that Balloon Payments were originally introduced to delay the half way point of the payments to near the end of the term .

Mena · 24-06-2009 10:35am

Sponge Bob wrote: »

IIRC I was told that Balloon Payments were originally introduced to delay the half way point of the payments to near the end of the term .

Yeah, I would imagine so. I only had seven months left on mine when I gave it back to them, and that was just at the halfway point.

Kafer · 24-06-2009 11:23am

@Mena. Very interesting. Was the value of the car less than the amount owed on finance?

Nice way of getting out of a lease on a yoke that has dropped due to the VRT changes.

Mena · 24-06-2009 11:25am

Kafer wrote: »

@Mena. Very interesting. Was the value of the car less than the amount owed on finance?

Nice way of getting out of a lease on a yoke that has dropped due to the VRT changes.

Considerably less. I'd say they're still miffed with me

Which brings up another point that I may test in the future. Would they authorise another HP agreement were I to apply? Interesting. I know my credit rating is in top form so they couldn't decline over that. Almost tempted to test out the waters...

Kartale · 24-06-2009 11:31am

this is a response i got in April

Thank you for your email enquiry.

The Financial Regulator is an independent watchdog set up by the Government to regulate firms that provide financial services, and help you make informed decisions about your personal finances.

If you want to end a hire-purchase agreement and keep the car, you must pay the full hire-purchase price (the cost of the car plus interest and any other costs). You will get some discount on the amount of interest you have to pay, if you are ending the agreement early.

If you find it difficult to keep up with your payments or you have already missed payments, contact the bank or finance company as soon as you can. They will often agree to change your agreement to make it easier for you to make payments. If you and they agree to this:

the bank or finance company may be entitled to charge you a rescheduling fee;
the bank or finance company will extend the length of the agreement so you will have to pay extra interest to cover the longer period; and
the amount of the instalment you pay each week or each month may be lower, but it will take you longer to own the car because the agreement has been extended.

Even with these extra costs, changing your agreement will usually cost you less than ignoring the problem and possibly having the car repossessed. Changing your agreement also means you can continue to use the car.

If you are not sure what to do, you can get help from the Money Advice and Budgeting Service (MABS). MABS is an independent organisation set up to help people organise their finances and manage their debts. There are a number of MABS offices throughout the country and its services are free and totally confidential. For more details, call the MABS helpline on 1890 283 438 or go to www.mabs.ie

If you cannot afford the repayments you can you can end a hire-purchase agreement at any time. However, you must:

give notice in writing and return the car;
pay half the hire-purchase price, less the total of your payments to date (including any deposit you paid). This is sometimes called the 'half rule';
pay the cost of any repairs needed if you have not taken reasonable care of the car.

Under a hire-purchase agreement you have a duty to take reasonable care of the car. You can usually expect to receive a bill for repairs if the car is damaged when you return it. With car repairs, you could consider getting a mechanic to check the car and pay for any necessary repairs before you return the car to the bank or finance company.

You should contact your lender and tell them that you want to end the hire purchase agreement under the "Half Rule". Once you have paid half the hire-purchase price, they must accept this decision. Make sure you DO NOT sign a voluntary surrender form when you leave back the car or you will have to repay the balance on the hire purchase agreement. If you sign a "voluntary surrender form", you give up your right to end the agreement under the half rule.

When you have a hire-purchase agreement, most lenders send details of the repayments you make to a credit-reference agency, the Irish Credit Bureau (ICB). This information builds up your credit record (or history). The ICB keeps details of repayments on your agreement (such as any payments you have missed or not paid on time) for five years after the agreement ends. You can get a copy of your credit record from the ICB for a small fee. You cannot get information about your credit history over the phone, as credit-reference agencies must keep your information confidential. If you end a hire-purchase agreement early, give back the car and pay back what you owe, your credit record will not be affected. The agreement will be shown as completed. More information on your credit record is available at this link http://www.itsyourmoney.ie/files/publications/p_20080219014745You%20and%20your%20credit%20rating%2006.02.08.pdf

More information on car finance is available from the Financial Regulator's consumer website, itsyourmoney.ie. For your convenience I attach the following link:

http://www.itsyourmoney.ie/files/publications/p_20080128041858Car%20Finance%20Jan%2008.pdf

I hope this information is of assistance to you.

Yours sincerely

xxxxxxxxxxxx
Consumer Information Department
This email does not constitute legal opinion or advice.

Mena · 24-06-2009 11:35am

Kartale wrote: »

Make sure you DO NOT sign a voluntary surrender form when you leave back the car or you will have to repay the balance on the hire purchase agreement. If you sign a "voluntary surrender form", you give up your right to end the agreement under the half rule.

Sorry, I should have stressed this point. Twice they tried to get me to sign a VSF as above. Don't do it!

leninbenjamin · 24-06-2009 11:46am

Mena wrote: »

Sorry, I should have stressed this point. Twice they tried to get me to sign a VSF as above. Don't do it!

they do it to everyone. Seems to me financial regulator have had to step in quite a bit recently to ensure people's statutory rights are met.

Ferris · 24-06-2009 5:26pm

MABS are very good at dealing with HP agreements and particularly the half rule. They will assist you in dealing with the bank also.

Flan45 · 24-06-2009 9:11pm

Mena wrote: »

Considerably less. I'd say they're still miffed with me

Hi Mena,

I'm in the middle of arranging to return a car at the moment. As above the value of the car is now much less than the finance outstanding. Did the finance company cause you any hassle regarding repairs or was it straight forward?

I have a small scratch on the bumper of mine and I'm not sure whether to get it repaired or not prior to handing it back.

GusGus · 24-06-2009 9:36pm

I am trying to sell my car at the moment. I have 21000 left to pay on it but car is only worth 17000.

when you mean the half rule does this mean the figure Iv paid off including or excuding interest ????

Mena · 25-06-2009 8:13am

Flan45 wrote: »

Hi Mena,

I'm in the middle of arranging to return a car at the moment. As above the value of the car is now much less than the finance outstanding. Did the finance company cause you any hassle regarding repairs or was it straight forward?

I have a small scratch on the bumper of mine and I'm not sure whether to get it repaired or not prior to handing it back.

It was very straight forward, but then I did have to pay for some repairs. I had mine independently assessed to get an estimate of the damage (someone backed into me and I never bothered to repair it).

I had to pay €1100.00 to them for the repairs, but it was inline with what I expected so there was no hassle.

Make no mistake though, they'll bring the car to perfect condition and charge you for it.

GusGus wrote: »

I am trying to sell my car at the moment. I have 21000 left to pay on it but car is only worth 17000.

when you mean the half rule does this mean the figure Iv paid off including or excuding interest ????

It includes everything

If you owed 40k at the start, the total of your monthly repayments added up so far is 17k and you paid a 2k deposit and 1k documentation fee, then you're at the halfway point, as you've paid off 20k of the total 40k owing.

rebel.ranter · 25-06-2009 9:47am

I still cannot understand how availing of the "half rule" will not affect your crdit rating.

Mena · 25-06-2009 9:56am

rebel.ranter wrote: »

I still cannot understand how availing of the "half rule" will not affect your crdit rating.

It's your right to terminate an HP agreement once 50% of the total outstanding amount has been paid to the lender. It's just part of the Hire Purchase Act of 1946.

I had some concerns about this as well but was assured by everyone it does not, and several months later (and several ICB reports on my credit rating later) they were proved correct.

lanners37 · 08-07-2009 5:09pm

Mena wrote: »

It's your right to terminate an HP agreement once 50% of the total outstanding amount has been paid to the lender. It's just part of the Hire Purchase Act of 1946.

I had some concerns about this as well but was assured by everyone it does not, and several months later (and several ICB reports on my credit rating later) they were proved correct.

Thanks for your posts on this subject Mena.I have found them extremely helpful and informative.
I am returning my car this weekend under the half rule and would like to ask the following:

1.The car is pristine,except for a few small scratches.Should I get these repaired in advance of their assesor looking at it?I would imagine they would bill me to the teeth for repair of scratches(should they consider them worthy of repair)
2.The finance company want me to pay almost 200 euro to have their assesor look at the car on return.Did you have the same experience.
3.I am very aware that they may try to make me sign a Voluntary Surrender Form.Did you have to sign ANY DOCUMENTATION on returning your car?

Mena · 08-07-2009 6:03pm

lanners37 wrote: »

Thanks for your posts on this subject Mena.I have found them extremely helpful and informative.
I am returning my car this weekend under the half rule and would like to ask the following:

1.The car is pristine,except for a few small scratches.Should I get these repaired in advance of their assesor looking at it?I would imagine they would bill me to the teeth for repair of scratches(should they consider them worthy of repair)
2.The finance company want me to pay almost 200 euro to have their assesor look at the car on return.Did you have the same experience.
3.I am very aware that they may try to make me sign a Voluntary Surrender Form.Did you have to sign ANY DOCUMENTATION on returning your car?

Very glad I was able to help.

1. I'll be honest and say I'm not sure, but based on my experience they'll do just that, get them repaired and it will cost you. If you can have it done properly, at a reasonable cost, then go for it. Check your lease agreement, it should have a list of what's considered "acceptable wear and tear", maybe you'll get away with it.

2. Yup. Wanted €176.00 off me. I ended up paying it along with the €1100.00 or so for damages.

3. No, I signed nothing. All they wanted was a letter from me stating I was returning the vehicle under the half rule, terminating the agreement. In said letter I stated, in bold "This is not a voluntary surrender". That' all that was needed.

We agreed a mutually agreeable place and time for me to drop the car off for them and that was that.

Good luck.

Sponge Bob · 08-07-2009 7:59pm

A VSF is a Voluntary Surrender Form , can you explain whether this is the correct document you sign to avail of the half rule (or not) Mena and if not why not ???

I know there is a way 'not to do it' .

Mena · 08-07-2009 9:58pm

Sponge Bob wrote: »

A VSF is a Voluntary Surrender Form , can you explain whether this is the correct document you sign to avail of the half rule (or not) Mena and if not why not ???

I know there is a way 'not to do it' .

No, just don't sign it. If you sign a VSF, you are still liable for the entire agreement. If they ask you to sign it, just say no thanks.

"Half rule" hp agreement

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