Car Finance - What are you entitled to Know?

mickmcl09

A carpenter friend of mine had his vehicle repossessed over 2 and a half years ago - failure of some builders to pay him were the root of his demise.
In the last 3-4 months things have been looking up for him and he decided to enquire what the story with the vehicle was - the bank had not contacted him in 2 and a half years.
The vehicle was purchased for 65 to 68k, he had it for 15 months.
The bank gave him the impression that worst case scenario to expect a 20% hit.
Bearing in mind the vehicle was taken back around March 2008 - 6 months before everything went completely wallop.

It turns out the vehicle was sold for 17k!!!
The bank are looking for thirty something odd K.
To buy the actual vehicle today in a garage today and 2.5years older with more mileage would cost in the region of low 30K.

He's feeling like somebody has pulled a fast one in the bank and flogged it to a
colleague/acquaintance etc. - saying to themselves 'ah this guy can take the full brunt of his ways and I'll make a few quid off his back or my mate will have 4/6 years of free driving'.

At the time the vehicle was taken back, similar vehicles were selling for 53-57k. He says 40k would have been a steal in any man's language, but 17k, he smells a rat.

The bank has contacted him several times in the last 3 months, asking him how he proposes to pay (only since he contacted the bank).

Questions
1. Has he any entitlement to find out where the vehicle was sold?
2. Who sold it and to whom? To establish if there was a relationship between the vendor and purchaser or to establish if they were in cahoots if you like?
3. Is there an element of responsibility on the finance institution to sell at a reasonable price? By that I mean at least 60-70% of actual value and not less than 30% of actual value.

This guy wants to get on with his life and would love to pay off the debt.
Could he offer say 5-10k to see if the bank will accept this and write off the debt ie off his credit rating? What are the chances?

No posts knocking the guy for making such a commitment in the first place PLEASE!

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Hi since you have got no other replies ill tell you what i know or at least am fairly sure of, maybe someone else can confirm or deny.

If the vehicle is repossessed the bank have a duty to get the best price reasonably obtainable, to comply with this duty banks usually sell through public auction. Your friend should contact the bank to find out how the vehicle was sold, i would imagine it was using this method. He will probably only get the details of the auction and not the details of the person who bought the vehicle.
The bank would not be required to take unusual steps to get a higher price, such as holding off for a higher bid or a different auction.

As far as the price of the vehicle, you cannot compare it to similar vehicles in garages. A vehicle sold at auction is sold as seen, has no warranty/guarantee, may not even come with a spare key or log book.
If he paid €65k+ for it im assuming it was a jeep type vehicle or a high end car. Unfortunately the bottom fell out of the market for jeeps.
You would not get €40k+ in a garage or private sale for a jeep today. You say the bottom fell out of the market 6 months after the vehicle was repossessed in March 2008, well the bottom had already fallen out of the motor industry at that stage.

Ill give you a couple of examples, a lady came into the garage where my husband works yesterday to trade in her 2007 VW Toureg, salesman said she would get about €15k for it, she bought it for €65. She said ok, the salesman said "no im not offering you €15k i couldnt even take it off you". They are not selling the garage wont even take them in.
My brother in law has a 07 Land Rover Discovery, he paid €75k for it, garage offered him €18k for it a couple of months ago.

I know these vehicles are a year older than your friends but bear in mind his is being sold at auction so the price is going to be lower.
Also the price for jeeps and high end cars is always lower at auctions as people are not going to spend €40-50k on a vehicle they have no comeback on. Cars such as Avensis' and Passats will sell for better prices.

I wasnt surprised when i saw the price the bank sold the vehicle for.
I feel sorry for him taking such a hit but there is probably little he can do.
He should contact the bank and ask for details of the sale, he could offer them a lower amount in full and final settlement, i dont know if they will accept it. His credit rating will show the repossession and then clearance of the debt if they do accept it, but they wont amend his file to remove the repossession. Once it is cleared it will still remain for 5 years on the ICB.

seamus

Little bit surprised here.

When you buy a vehicle on finance it's usually a specific agreement. That is, if you fail to keep up the repayments, the car is taken and you're done, you owe no more. If this was a personal loan which he happened to use to buy a van, then the bank have no right to take his vehicle. If this was a motorloan, then once the vehicle has been repossessed, the debt should be finished.

Have him check the loan agreement documents and maybe consult a solicitor.

As said above, the market for second-hand SUVs collapsed in 2009 after the motor tax rates changed. SUVs are usually 2L or more which requires you to pay about €1k in motor tax if it was registered before July 2008, but usually only €200 or €300 if it's a newer car.
I was looking at cars at the start of this year and there were 3 and 4 year old SUVs going for €10k, which would have cost €30-40k new.

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I would be fairly sure it's a hire purchase agreement taken out over 5 years. This would mean the hirer doesn't actually own the vehicle until all repayment are made therefore the bank can reposses. The only thing that would help the guy is the 1/3 or the 1/2 rule. Basically the 1/3 rule is the bank need a court order to reposses if more than 1/3 of hire purchase price is repaid, and if more than 1/2 hp price paid he can return the vehicle and owe no more to the bank.
Judging from the figures in the op I would imagine he didn't even have the 1/3 repaid.

Mary Hairy

seamus wrote: »

Little bit surprised here.

When you buy a vehicle on finance it's usually a specific agreement. That is, if you fail to keep up the repayments, the car is taken and you're done, you owe no more.
.

That is not correct. When a vehicle is bought on finance the vehicle remains the property of the hirer. When there is a default the vehicle will be seized and sold. The customer will be liable for the balance of the outstanding payments less the sum realised on the sale of the vehicle. It happens every day of the week.