car repayment problem

auditek923

i cannot afford my car repayments. i have a 4 year finance loan on it with about 2 years left. i owe 10800 euro still. car is only worth about 11000 anyways. can i give car back or what can i do? i have become unemployed and so has my wife . we are trying to concentrate on our mortgage first and foremost. what can i do? can i hand car back to company or what?

aoibhebree

Can you sell it and pay the bank back with the money? I wouldn't think that would affect your credit rating

auditek923

i have tried but no offers. its a bmw too

snowy2008

yes of course you can, i used to work for asset finance in a bank, if you have over half the loan amount paid you can hand back the car and the bank have to accept it, if you arent, you can make a settlement with them and pay the shortfall, it may affect yor icb tho, if your over half paid, your icb wont be affected and the bank lose out, does that answer your question?

challengemaster

If you just hand it back, the bank might sell it at auction for only 6,500. That means they're still out of pocket, so you're up sh!t creek still.

Note: I'm not at all sure about this area. The above is what I've read before and taken to be true.

snowy2008

just look over your contract, if you want to scan it and send it to me i can show you where it is, they will do anything to make a profit

snowy2008

but it sounds like your over half paid, if you are then its plain sailing

fm

will your credit rating be affected if you have over half paid?

bazz26

teresa2008 wrote: »

but it sounds like your over half paid, if you are then its plain sailing

This was discused on here recentlly, it's known as the half rule or something afaik. Not alot of people are aware of this legal term including myself up to recently.

snowy2008

no it wont as you voluntaily terminated your agreement, actually, financial institutions can only legally look at your icb 6 months previous to your application

snowy2008

its known as the 1/2 and 1/3 rule, they have to tell you this but they dont coz they know they will lose money, anyone any financial questions, im in a helpful mood today

Anan1

teresa2008 wrote: »

if your over half paid, your icb wont be affected and the bank lose out

No offence, but i'm finding this very hard to believe. Any chance of a link?

Mena

It's the half rule under the Hire Purchase Act of 1946. It however only applies to an HP purchase I am afraid. Did you purchase the car under HP?

If so, and you have paid 50% of the total finance amount, you can hand it back with no repercussions, but they will probably knock you for a 200 odd euro fee to have the car checked.

This document explains it in plain English. Starts around page 15.

snowy2008

go onto the financial regulator website

auditek923

i dont know know where my contract , i have misplaced it, but yes we have over half the finance paid off

Mena

auditek923 wrote: »

i dont know know where my contract , i have misplaced it, but yes we have over half the finance paid off

Ask the dealer or the bank for a copy.

Anan1

teresa2008 wrote: »

go onto the financial regulator website

Could you give me a link to the actual rule?

Mena

Anan1 wrote: »

Could you give me a link to the actual rule?

See my post, number 13. I can link the actual statute if you want that as well?

Mena

I get the impression this was a loan you took out from the bank, in which case the half rule can't help you. If this is not the case then ignore the rest.

What you need to do is contact the bank, before you miss a payment. This way they are inclined to be a lot more helpful. Once you start missing payments without first speaking to them they tend to be a little meaner. Telling them not to lecture you about managing money until they can get their own houses in order is not a good idea either in my experience :P

Speak to them ASAP. They could assist by giving you a payment break, or renegotiating the loan over an extended period thus lowering your payments. Just do it all before you miss payments.

Simple fact is, they do not want your car (ie. repossession) because frankly, it's not worth much anymore, the market has been fried. They should bend over backwards to assist you if you are upfront with them.

Edit: One more thing. If the car is on HP, when you hand it back under the half rule (you must notify them in writing of this), make sure you do not sign a voluntary surrender form, as this waives your rights under the half rule and the bank can come looking for any shortfall in monies owed after the sale of the car.

snowy2008

go tell the bank your happy news in the morning, im sure they will be delighted with your new found knowledge, let us know how you get on!

auditek923

its with lombard finance

Mena

auditek923 wrote: »

its with lombard finance

Just looked at their website and it appears they do Consumer Hire Purchase, which as far as I am aware, does not qualify for the half rule, but don't take my word for it, check it out as I am not sure.

Saab Ed

My advice is to take none of the advice here. No offence to any of the other posters but there are some big legal issues here and we dont know the ins and outs of said contract are. Time for some proper legal advice I think.

snowy2008

i worked in asset finance for 10 years so i know exactly what im talking about...no offence.....

Mena

Saab Ed wrote: »

My advice is to take none of the advice here. No offence to any of the other posters but there are some big legal issues here and we dont know the ins and outs of said contract are. Time for some proper legal advice I think.

I've dealt with this type of issue many many times, but I still agree with you. Don't take advice from the Internet. Get the facts.

Saab Ed

teresa2008 wrote: »

i worked in asset finance for 10 years so i know exactly what im talking about...no offence.....

No offence taken but nobody in my industry predicted 4.75% growth this year.......as opposed to some sectors

boardswalker

there are a number of key issues here.

1 Look at the Financial Regulators website, specifically http://www.itsyourmoney.ie/index.jsp?1nID=93&2nID=94&3nID=104&pID=121&nID=303&aID=0
2 Ring the Financial Regulator for advice/clarification of anything you don't understand in that article.
3. Also read this article http://archives.tcm.ie/businesspost/2009/02/22/story39648.asp.
4. Find out what your loan/finance agreement says. Ask the bank for a copy and see if it makes reference to termination?

If its a hp agreement then I would expect to see a clause giving you the right to terminate the agreement if you are not in arrears and you have paid more than half of the hire purchase price - the half rule. The hire purchase price is equal to the purchase price of the car, the interest and any fees (documentation fees).

It seems to me that usually the half rule would not be a great deal for the lessee as usually the car would be worth more than the remaining payments. I suspect that usually it would have been better to pay off the lease and sell the car yourself.
However right now the car market has collapsed and I think it suits the lessee to walk away if they have paid more than half of the hire purchase cost.

However, check what sort of finance you have first.

There have also been a number of good threads on this in askaboutmoney.com

Mena

Just remember that an HP contract will very rarely have a clause outlining the half rule, it's not in the banks interest. A contract, however, cannot overrule the law, and the half rule is part of the Hire Purchase Act of 1946.

eamon234

A HP agreement legally has to show the amount to be paid under the half rule if you get a copy of the agreement it should be written on it.
Bear in mind though that if the car has excessive mileage or any damage you may be charged for it.

boardswalker

On termination of a hp agreement under the half rule, you will have to pay for anything other than "normal wear and tear". As to what is normal wear and tear, the financial regulator advises to have the car looked at by an SIMI member. One member advised me that stone chips on paintwork, worn tyres, worn mats would all be normal wear and tear. A dent on the bodywork would not. Its all a bit subjective.
The other thing the FR is strong on is not to sign anything that could be a voluntary surrender. A voluntary surrender is not the same as a termination under the half rule. With a voluntary surrender you give up your rights and thats not what you want. The bank may ask you to sign "their standard termination letter". Get that checked out.

bf

OP - how about posting some details of your car up here? I know strictly speaking advertising isnt allowed but I'm sure mods would not object to boards users potentially helping each other out in difficult times?

You never know someone may know soemone who is looking for a car like yours!

boardswalker

This thread has got me wondering.
If you terminate a hp agreement under the half rule and the finance company put the car up for auction, could you, the original lessee, buy the car off the finance company? Would they let you do that?
I suspect there are many people with hp agreements that are over half paid.
In theory they could terminate, buy back the car very cheaply in the current climate and end up with same car and lower borrowing. I think the bank would not be happy but can they do anything about it.
The half rule is a legal "right".

eamon234

boardswalker wrote: »

This thread has got me wondering.
If you terminate a hp agreement under the half rule and the finance company put the car up for auction, could you, the original lessee, buy the car off the finance company? Would they let you do that?
I suspect there are many people with hp agreements that are over half paid.
In theory they could terminate, buy back the car very cheaply in the current climate and end up with same car and lower borrowing. I think the bank would not be happy but can they do anything about it.
The half rule is a legal "right".

Anyone can buy a car at auction - the chances of you finding your car at auction and then winning it back won't be that easy - plus a lot of finance companies sell their cars from their own asset disposal sites which involves a sealed bid from any potential buyers - auctions are usually the last resort.

scooter 007

any more news on this subject

Fishtits

I think the basics here have been lost in a P*ssing contest.

What are the terms & conditions of the original agreement/contract?

They will be the basis of any settlement IMHO.