"Half rule" hp agreement

dmrules

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

dmrules wrote: »

doing this.

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

dmrules

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

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

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

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

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

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

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.

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

Drummerboy08

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

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

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

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

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

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

@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

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

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

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

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

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

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

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

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

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

Mena

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

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

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

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

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.

beardo81

Hi, question, hope someone can help....

I need to surrender the car, cant afford it and have only 18 months of a 60 month agreement paid, plus im in arrears. Is my only option the VSF? I know im going to get shafted anyway after the car is auctioned, reserve or no reserve on it.

Any help to save me €000's would be greatly appreciated!!

Mena

Is it an Hire Purchase agreement? Have you passed the 50% payments on it?

beardo81

Yup is a HP Agreement with Bank of Scotland. No, havent reached the 50% mark either.
I fear im rightly srewed here, just goin to have to play ball with them?

serjical_strike

hello everyone i have a few quick questions for you if you dont mind..

i have my car on higher purchase and have paid off over 50% of the higher purchase price, now i dont want the car any longer as i have the money to buy a new one straight out. can i return my hp car under the half rule and if i can then what should i exactly say on the letter?? also who should i send this letter too is it the garage i originally got it from or the bank my direct debit is going to??

also when i first went to sign for the car would they have tricked me into signing anything that could have waived the half rule for use in the future, like getting me to sign the voluntary surrender form first day or anything like that???

any help would be great.. thanks

Mena

beardo81 wrote: »

Yup is a HP Agreement with Bank of Scotland. No, havent reached the 50% mark either.
I fear im rightly srewed here, just goin to have to play ball with them?

apologies for the late reply, been on holidays so on here far less. As you've not reached the 50% mark you can't avail of the half rule. Best bet is to talk to them, banks can be very reasonable if you communicate with them before problems start, the last thing they need now is another car on their books that they can't sell.

serjical_strike wrote: »

hello everyone i have a few quick questions for you if you dont mind..

i have my car on higher purchase and have paid off over 50% of the higher purchase price, now i dont want the car any longer as i have the money to buy a new one straight out. can i return my hp car under the half rule and if i can then what should i exactly say on the letter??

Simply phone them up and tell them you want to return the car under the Half rule as per the Hire Purchase Act 1946. They will likely (once the surprise and shock dies down - they could very well deny the Half Rule exists, my bank did at first ) request a letter. Mine simply stated:

Dear X

I am hereby informing you that, under the "Half Rule" as per the Hire Purchase Act of 1946, I am returning my vehicle. Please note that this is not a voluntary surrender and I will not be signing any document to that effect. Please contact me at XXX or on YYY so that we can discuss a mutually agreeable date, time and location for the return of the vehicle.

Sincerely

XXX

That was it. Make sure to quote your HP account number as well.

serjical_strike wrote: »

also who should i send this letter too is it the garage i originally got it from or the bank my direct debit is going to??

The garage has nothing to do with it, deal directly with the bank/finance house.

serjical_strike wrote: »

also when i first went to sign for the car would they have tricked me into signing anything that could have waived the half rule for use in the future, like getting me to sign the voluntary surrender form first day or anything like that???

No, and even if they did you cannot sign away your rights so it would not matter. It's only now that they may (it's low of them, but some do it) ask you to sign one, just say no thanks if they do.

serjical_strike wrote: »

any help would be great.. thanks

Hope that helps. Post here or PM me if you need further clarification.

serjical_strike

that is a great help and it clears up a lot for me, i will be doing this as soon as i get home from chad. good to know they can do nothing about it and that i havent been caught by signing somethin already, thanks again for the help mena.

copacetic

as Mena says, they will tell you there is no such rule, that you'll never get a loan again etc etc and every time you ring they may claim there is no record of any other call. Then they may also arrange to call you and not do so and arrange for people to pick the car up that never turn up etc, just stick at it.

Dr.Tom

Mena wrote: »

As you've not reached the 50% mark you can't avail of the half rule

You can still avail of the "half rule" but you will just need to pay the balance to make up half the total agreed price.

Example:

Total purchase price 20,000 (half of this being 10,000)
So far you have paid 5,000
Balance owing to make up half the total purchase price is 5,000

You contact them,explain the half rule story and tell them you will be sending them on a cheque for 5,000 and handing the car back.

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.

* 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).

lanners37

Mena wrote: »

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.

Good Morning,
I returned car to a mutually agreed venue on 16/07/09.Received a letter from the Hire Puchase Company this morning(dated 13/08/09),demanding 2200 euro,or threatening legal action!!They claim that,after their assessors report,there were scratches on bodywork,and a slight mechanical problem(misfire in engine).
I kid you not,the car was 100% pristine when I dropped it off,no scratches(I even had a panel beater look over it on 15/07/09),and car was in perfect mechanical order.
This is obviously a blatant attempt to recover some of the depreciation loss on car(i reckon it is worth 17k-18k),half rule figure was 21k-22k.
Any advice on what I should do?

Mena

lanners37 wrote: »

Good Morning,
I returned car to a mutually agreed venue on 16/07/09.Received a letter from the Hire Puchase Company this morning(dated 13/08/09),demanding 2200 euro,or threatening legal action!!They claim that,after their assessors report,there were scratches on bodywork,and a slight mechanical problem(misfire in engine).
I kid you not,the car was 100% pristine when I dropped it off,no scratches(I even had a panel beater look over it on 15/07/09),and car was in perfect mechanical order.
This is obviously a blatant attempt to recover some of the depreciation loss on car(i reckon it is worth 17k-18k),half rule figure was 21k-22k.
Any advice on what I should do?

I had the same, though mine came to €1100.00. I just paid it, after making numerous complaints about the way it was handled (same thing - first contact from them was a demand with a legal threat).

In my case, there was some damage to the car and the amount they asked for was roughly equal to what I thought it would be after checking it out. In your case, they seem to be taking the piss.

I'm not qualified to advise you in this case, I am certainly no solicitor. If I were you however, I would contact them and state you are disputing the amount and ask to see details of what was involved. I would also contact my solicitor.

It may however, in the long run, just be easier to pay it and walk away.

lanners37

Hello Mena,

Thank you again for the advice.In all honesty I think that I would rather go to jail than give them a cent!!!
I returned my car in immaculaute condition,as per my legal rights.How dare they try it on to the tune of 2200 euro,in such a heavy handed fashion,brazenly,with no basis for their claim.What was to stop them demanding 5k-6k!!!???

If am refuting their claim in full,and if I hear from them again I will:

1.Take legal advice,obviously.
2.Complain the institution involved to the Financial Services Ombudsman etc
3.Post details of the half-rule on every website/webforum imaginable,advising people how to act(take pics of car,get assessors report before return etc)The half rule is a little known loop hole at the moment,and people out there who are struggling with repayments have a right to know about it.The financial institutions involved will then have cars coming back to them quicker than they can handle them!!!

gafarrell

Do anybody know if the "Half Rule" applie to a Lease agreement or is it just for Hire Purchase agreements?

Mena

gafarrell wrote: »

Do anybody know if the "Half Rule" applie to a Lease agreement or is it just for Hire Purchase agreements?

Just Hire Purchase.

Dr.Tom

gafarrell wrote: »

Do anybody know if the "Half Rule" applie to a Lease agreement or is it just for Hire Purchase agreements?

Just HP as I unfortunately found out. By signing up to a Lease you do away with your rights as a consumer under the Consumer Credit Act 1995 by reason of the fact that the Leesee is not a Consumer and is acting within a trade or business profession,even though Im not (Is this even legal)

Bottom line is Im a Joe Soap who just happened to need a van for hauling his own personal motorcycles about. I am employed by a company (not self employed) and neither have a business,trading name,VAT number nor a business bank account. Always be careful what you sign as none of this was explained to me when signing up for my van. As I dont wanna get a bad credit rating Im stuck now with a van worth half what I owe on it

FridgePack

That's interesting about the van and lease. I have a van for personal use (windsurfing), not self-employed etc. At the time of buying I was told I could not get a car loan and the bank would only lease it to me. In my own ignorance and as no one I know knew anything about this sort of thing I thought it was normal.

With the current price of second hand and repo vans I would save money if I get out of the lease and buy another van for cheaper. I need a NAMA for my van!

fp

Drummerboy08

You dont have to worry about disposing the vehicle with a lease. You should have no worries as to what the van is worth doc, because you dont own the vehicle at the end of the term.

Had you hire purchased the vehicle, your monthly rentals would have been more expensive than compared to a Lease, because you would be financing the entire cost of the vehicle, as opposed to the entire cost minus the residual.

purpleheather

Guys,

Really interesting thread. However...I would like to add a further complication to previous posts. I have had my HP agreement since mid 08 and got made redundant from my job soon after in Sep. Spoke to lender and managed to agree a 3 month payment break which was extended for a total of 9 months (3 seperate negotiations). Following that I have had my monthly payments reduced to just e100 (from e400) pcm until Jul next year.

So I have done the responsible thing and spoken to the lender and hammered out an agreement but I think I have made the wrong decision. I have c.e18k left on the 'loan' and the car was recently valued at around e14k retail by a dealer. On that basis by Jul next year I can expect that to have gone down to e10-12k leaving me with a considerable negative equity based on my current low repayments. And on a even more basic level I doubt I will be able to meet the e400 payments when they go back up in Jul next year!!

Reading the posts I understand I could exercise the half rule but that would mean I still owed them c.e10k! 3 questions -

- Firstly, Can I exercise the half rule knowing I cannot hand them a cheque for e10k?
- Secondly, If I do and I do not have the cheque to give them what are they going to do? I am guessing they will issue legal proceedings and I will compromise my credit rating but the way I see it CRs will mean very little in this country over the next 5 years (which I believe is the length of time it would stay on record)
- Thirdly, is it true that by handing the car back on a VSF they should account for the market value of the property in respect of the original loan - ie Total loan value - (market value of car + the money I have paid) = amount outstanding?

Basically I think the word 'shafted' probably describes my situation quite well but I thought it worth posting to see if anyone had any thoughts/insights they could offer a victim of circumstance!

Thanks in advance!

Senna

purpleheather wrote: »

- Firstly, Can I exercise the half rule knowing I cannot hand them a cheque for e10k?
- Secondly, If I do and I do not have the cheque to give them what are they going to do? I am guessing they will issue legal proceedings and I will compromise my credit rating but the way I see it CRs will mean very little in this country over the next 5 years (which I believe is the length of time it would stay on record)

Simple answer no, you must have paid 50% or more to use the half rule. So you would need to give them the 10k cheque first when/before using the rule.

Just an idea, but could you approach your bank about a loan for 10k, stretch it out over a longer term, 3-5 years. You could be rid of the car and be paying much less per month than your current repayments.

Kartale

purpleheather wrote: »

Guys,

Really interesting thread. However...I would like to add a further complication to previous posts. I have had my HP agreement since mid 08 and got made redundant from my job soon after in Sep. Spoke to lender and managed to agree a 3 month payment break which was extended for a total of 9 months (3 seperate negotiations). Following that I have had my monthly payments reduced to just e100 (from e400) pcm until Jul next year.

So I have done the responsible thing and spoken to the lender and hammered out an agreement but I think I have made the wrong decision. I have c.e18k left on the 'loan' and the car was recently valued at around e14k retail by a dealer. On that basis by Jul next year I can expect that to have gone down to e10-12k leaving me with a considerable negative equity based on my current low repayments. And on a even more basic level I doubt I will be able to meet the e400 payments when they go back up in Jul next year!!

Reading the posts I understand I could exercise the half rule but that would mean I still owed them c.e10k! 3 questions -

- Firstly, Can I exercise the half rule knowing I cannot hand them a cheque for e10k?
- Secondly, If I do and I do not have the cheque to give them what are they going to do? I am guessing they will issue legal proceedings and I will compromise my credit rating but the way I see it CRs will mean very little in this country over the next 5 years (which I believe is the length of time it would stay on record)
- Thirdly, is it true that by handing the car back on a VSF they should account for the market value of the property in respect of the original loan - ie Total loan value - (market value of car + the money I have paid) = amount outstanding?

Basically I think the word 'shafted' probably describes my situation quite well but I thought it worth posting to see if anyone had any thoughts/insights they could offer a victim of circumstance!

Thanks in advance!

I wonder are you still entitled to the half rule , because you have re negotiated the original hire purchase?
If so, you need to look carefully at your loan documents , the Half & 1/3 figures are hand written by the selling car dealer. If you owe less than this 1/2 figure you can hand car back without repercussion

purpleheather

I believe I would still be eligible to exercise the half rule as there were no amendments to Ts&Cs. Only a 1 pager detailing the revised payment schedule.

The loan idea could be an option in theory as it means the bank would still recoup the value of the loan. However, it might be difficult as I am unemployed and therefore 'officially' ineligible for a personal loan. I guess if I went to the bank and said I cannot pay it to them as a lump sum they would have to take me to court and the outcome would probably be the same as issuing a loan as I would have to pay them back over the longer term. hmmmm...