Giving back a car on credit

stacexD

My dad bought a car 4 years ago on credit from Allied Irish Finances or some company like that associated with AIB.
The car was €25,000 and hes paid off about 27k of that since. He lost his job last year and when he checked how much he owed back then it was around €7,000. for a year after he lost his job he paid the full payments up until 3 or 4 months ago he made an agreement to lower the payments for a while. The other week they were on to him saying they would no longer accept the lower payments.
On thursday he got a phonecall from AIB about it saying they've agreed to accept the lower payments but it will ruin his credit rating, and that he still owes €7,000 (dont know how that worked out). They also gave him the option to give back the car and said this would leave his credit rating untouched, but the offer was only open until thursday.
Now those cars are only worth about €4,000 at this stage and it has an engine problem that would probably decrease the value to maybe €2,000. So I think giving it back would be better than paying 7k since the car isnt even used anymore.
The reason I'm writing this is that my mother seems to think she seen something on the news about wiping off credit that cant be paid back once you've paid the loan amount back (or something along those lines)
But anyways, does anyone who actually knows what they're talking about have any opinion on what he should do?

What car was bought for €25,000 4 years ago is now worth €4000?

Milk & Honey

There is a provision in the HP act that when half of the amount borrowed has been paid back the car can then be given back to the lender and the loan is wiped out. There is some comment on this in the motors forum.

stacexD

RoverJames wrote: »

What car was bought for €25,000 4 years ago is now worth €4000?

Does it matter?

Goodne

Rings Mabs or Citizens Advice for some information; they are dealing with situations like this on a daily basis. I think there is a way of giving back the car once a certain percentage of the loan is repaid without repercussions on your credit.

Milk & Honey

Here is the link. Read carefully.

http://www.itsyourmoney.ie/index.jsp?p=665&n=771&a=1174

Reloc8

Check the HP agreement - it will have the 'half rule' amount (basically half of total cost of finance).

Assuming he's paid that, he can give the car back (the link above explains how).

Giving the car back under the half rule won't affect his credit rating. Failing to pay any arrears will.

He is still liable for any arrears owed as of the date he avails of the half rule.

Avatargh

Reloc8 wrote: »

Check the HP agreement - it will have the 'half rule' amount (basically half of total cost of finance).

Assuming he's paid that, he can give the car back (the link above explains how).

Giving the car back under the half rule won't affect his credit rating. Failing to pay any arrears will.

He is still liable for any arrears owed as of the date he avails of the half rule.

Consumer v non-consumer?

stacexD

In one of the links it says you may be liable for repairs, would that include the engine problem? The engine problem is most liely something small but the engine will need to be taken apart to find the problem. I'm pretty sure its just wear and tear though