Want to get rid of a car on hire purchase - help!

Marge226

hello all,


i bought a car in sept 2004 on hire purchase and having recently moved to dublin, dont use it anymore! - Its too expensive to have sitting in my driveway.

anyway, i wonder what the best way is to get out of this - sell it privately and pay off the balance outstanding from the money i get? or should i just try and get out of the agreement with the garage?

I know there is some kind of fee charged (but wasnt advised of this) when you end a hp agreement early.

Also, i never actually got a complete hire purchase agreement? i just signed a form saying i purchased a 2001 alfa romeo and the guarantee was 3 months. no info about monthly payments, term of hp or anything else.....dont even know if the form was called a hp agreement!

anyway, id really really appreciate any wise words/experiences of anyone who knows about this.

tx.

PaddyFagan

Hi

The best thing would be to find out who the HP agreement is with - it's very unlikely to be the garage directly. I'd imagine is Permanent TSB, GM Money or some other large finance company. Then contact them and find out what the cost of clearing the finance is. Then at least you'll have some idea of what the options are.

Because of the lack of documentation etc you may have some legal out of the whole thing, but you'd really need to talk to a legal person about that. At the very least it should give you some leverage with the finance company if they tell you the cost of exiting the HP will be very high.

Paddy

Marge226

thanks paddy.

will do.

br
claire

Eoin

Hi Claire/Marge226,

First of all, you may find - as I did - that selling the Alfa is not worth your while. The car has depreciated a lot since you bought it, unless you got it for a good price back then. Have a look at www.carzone.ie and www.cbg.ie and see what similar cars are going for.

If you still want to sell, then look at getting a variable rate personal loan from a bank to pay off the HP loan. With a lot of HP agreements you don't technically actually have the right to sell the car as they effectively own the car until a certain percentage of the car is paid off (despite whose name the car is in on paper). The personal loan will be unsecured, so even though it is for the purpose of buying a car, the bank do not have any direct interest in the car, and you are free to sell it as you please. Make sure the loan is variable rate so you can pay back as much as you want in one go.

I did the same thing a while ago, and although there may be an administration fee for closing the account early, the sum you have to pay back should also be reduced slightly, as you will not owe as much interest on the loan (as you are borrowing over a shorter term).

Of course, the easiest thing to do is just try and sell the car, and settle up afterwards. However, the buyer may have problems with this - if they do a HP check, they will see that money is outstanding on your car, and may not want to touch it. They may want a letter of release from the HP company so they know the car won't be repossessed. It is hard enough to sell privately, particularly Alfas, so if I was in your position, I would make sure there is as little as possible standing in the way of a sale.

Good luck,

Eoin

PaddyFagan

eoin_s wrote:

I did the same thing a while ago, and although there may be an administration fee for closing the account early, the sum you have to pay back should also be reduced slightly, as you will not owe as much interest on the loan (as you are borrowing over a shorter term).

Just to note that Tesco loans have no charge for early repayment & the interest rate is very good. So if you are planning to go this route, they might be the best people to talk too. The only downside is the time it takes to sort out - is all arranged through Ulster Bank Belfast and there is a lot of posting paper work back and forth. (I tried to set one up, but it took too long to arrange so I ended up back with my current bank)

Paddy

Eoin

PaddyFagan wrote:

Just to note that Tesco loans have no charge for early repayment & the interest rate is very good. So if you are planning to go this route, they might be the best people to talk too. The only downside is the time it takes to sort out - is all arranged through Ulster Bank Belfast and there is a lot of posting paper work back and forth. (I tried to set one up, but it took too long to arrange so I ended up back with my current bank)

Paddy

The time shouldn't bother the OP - the Alfa won't sell too quickly, unless it is at a bargain price...

HP interest rates are usually much lower than personal loans, so they do make sense for people who intend to either hang on to the car for the duration of the loan, or trade up and use the same finance company - in which case you can usually negotiate reduced fees for the top-up loan.

MercMad

Contact the HP company and find out whats owed and establish whether its more or less than the market value. If you owe more than its worth tell them due to a serious reduction in your income, you wont be able to pay off any more of the loan and will they take the car back !

There's no point in borrowing 7,000 to pay off the outstanding finance and then selling the car for 6000 !

If you have some equity then again tell them you need rid of it and you have the chance to include a certain small amount in a "refinancing/home loan" and ask them what's the minimum they will accept, make them an offer !

Believe it or not this does work and doesn't affect your credit rating ! They just want rid of the hassle. This is how most traders buy from HP companies, i.e whats outstanding bears no resemblence to what they will accept to clear their books !

ninty9er

in a HP agreement you must legally be shown the loan amount, the rate, the number of repayments, how much each one is, how often, the total interest, and the total cost of the loan before you sign, I'd ask a solisitor, that's only a leaving cert business background