Car on HP.. what happens if I want to trade in??

Masala

Hi

When I bought my 09 car brand new - instead of a Personal Loan the Bank insisted on making the deal into a HP arrangement for 5 x years. As I had no choice at the time - I just signed.

However - I now am looking at upgrading to a 2012 car - and just wondering what happens next. The garage selling me the 2012 is willing to arrange finance with my trade in. Lets say €5k + my car will do the deal !! (all hypothetical figs just for simplicity!) So all sounds simple!!

Lets say I still owe €10k on the HP - will they allow me proceed without their authority??? In effect - I will have to borrow €15k from Garage Finance and give €10k to my HP Bank and €5K to Garage.

So - can I do the deal with Garage without the HP people getting involved. If so - will there be any problem in sorting out the HP afterwards?

All help taken on board!

coylemj

The deal will either have to involve your existing loan being paid off in full, or the proposed purchase will need to be financed by the existing finance house so you basically get an extension to the current deal and the new car will be under a new HP agreement.

You can't do the deal without having the HP company involved, otherwise it's fraud as you will be trading in an asset as part exchange that you do not own.

Masala wrote: »

Lets say I still owe €10k on the HP - will they allow me proceed without their authority???

'Allow me to proceed' and 'without their authority' in this context are completely contradictory. Are you sure you understand how HP works? You do not own the car until you make the last payment so you cannot trade it it without their involvement.

Masala wrote: »

So - can I do the deal with Garage without the HP people getting involved.

No

Masala wrote: »

If so - will there be any problem in sorting out the HP afterwards?

Yes, huge problems.

First, the HP company will send out a recovery truck to repossess the original car from the guy who buys it from the dealer who sold you the 2012 car. Then the dealer who took your car as a trade-in will come after you and if he is the type who accepted your car without doing a background (motorcheck/cartell) check which would have flagged it as a car with outstanding finance, it's highly unlikely that his representatives will be the polite types if you get my drift.

Just don't even think about it.

Masala

Thanks Coyle... I don't want to exclude them but will they be co-operative?? Am afraid that they will want to see the 5 years out and not want me to pay it off quick. I presume that if I owe €10k.. there would be a small saving if I pay off early!

Also - the Garage Finance would be cheaper than the 'High Street' Bank I currently with- so it would be better for me to move !

Rest assured- all will be above board - just don't want to start negotiations with Garage and then have current lender tie me up in knots !!

coylemj

Masala wrote: »

Thanks Coyle... I don't want to exclude them but will they be co-operative??

It's not like you have any choice. You do not own the existing car until you make the last payment so you have to involved them in the new deal.

Masala

I understand the HP concept - that not a problem.

It's the 'what if I want to get out of it now' concept that I am worried about. I would expect that the bank don't really want the car - its only an asset against the loan. Its the getting out of the HP agreement that I am asking about.

I have a get out with the Garage Finance willing to 're-finance' - but will the Bank play ball easily??

bobin fudge

should have asked the bank all these questions before entering into the contract, as you clearly have no real understanding of what you signed up for

coylemj

Masala wrote: »

I have a get out with the Garage Finance willing to 're-finance' - but will the Bank play ball easily??

Don't believe a word of what that dealer is telling you. Alarm bells should ring when you hear the term 're-finance'.

It's totally up to you to disengage from the existing HP agreement. I would not disengage by proxy by allowing a dealer to 're-finance', otherwise you will go from one bad deal to an even worse one.

I agree with the previous poster. You seem to have a serious information deficit as to exactly the position you're in regarding finance and ownership.

Masala

should have asked the bank all these questions before entering into the
contract, as you clearly have no real understanding of what you signed up for

Thanks. Am sorted now after that expert opinion.... I owe u a pint

bobin fudge

Masala wrote: »

Thanks. Am sorted now after that expert opinion.... I owe u a pint

yeah, fair point. Didnt mean to sound harsh

AltAccount

You or the garage will have to call the HP company and get a settlement figure for the loan (€10k plus whatever interest loss or penalties clauses the contract has) and that will need to be added to the €5k cost to change.

Scortho

Just to add my 2 cents, their is a get out of jail card for yourself but it would involve handing bact the keys to the bank.
As its hire purchase, once youve paid 50% of it back, you can return it to the hire purchase company.
In fact according to the nca/high court you can return it even if you havent paid half the hire purchase price back.
It would involve having no car to trade in, but the amount outstanding may be worth more than what the car is worth.

coylemj

Scortho wrote: »

In fact according to the nca/high court you can return it even if you havent paid half the hire purchase price back.
It would involve having no car to trade in, but the amount outstanding may be worth more than what the car is worth.

But if he walks away from the current HP deal, his credit record could be affected and he may not get finance for the new car.

It may be legal to do so but it's probably still regarded as a credit default or at the very least a credit 'event' that's worthy of note by the ICB and in the current climate that may mean doors closing in his face when it comes to financing the new car.

AltAccount

That's true also. If you bought your car in '09, you're more than halfway through the HP.

If your car is worth less than the outstanding HP amount, it might be worth looking at.

copacetic

coylemj wrote: »

But if he walks away from the current HP deal, his credit record could be affected and he may not get finance for the new car.

It may be legal to do so but it's probably still regarded as a credit default or at the very least a credit 'event' that's worthy of note by the ICB and in the current climate that may mean doors closing in his face when it comes to financing the new car.

It's certainly not any kind of default and not noted as such, the HP companies tend to scaremonger that type of thing also. They will also claim its not an option etc to begin with. There are a few lengthy threads on boards re the option.

It's in all HP contracts by law, they can't note it as any type of bad event, except an early settlement, same way it would be noted if paying off HP any other way.

The only possible effect is that getting HP off the same company again could be difficult.

Yes, exiting a HP agreement via the half rule does not affect your credit rating. The company might try to bluff but they legally can't do it.

AltAccount

Make sure you read the thread on HP handbacks - you need to be very wary about what you're signing when surrendering your car.

Scortho

coylemj wrote: »

But if he walks away from the current HP deal, his credit record could be affected and he may not get finance for the new car.

It may be legal to do so but it's probably still regarded as a credit default or at the very least a credit 'event' that's worthy of note by the ICB and in the current climate that may mean doors closing in his face when it comes to financing the new car.

its not.
http://www.irishstatutebook.ie/1946/en/act/pub/0016/sec0005.html#sec5

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.

If you voluntarily surrender it, it would trigger a credit event if you didnt repay the difference owed.

http://www.nca.ie/nca/car-finance-debt#halfrule

coylemj

Scortho wrote: »

its not.

It's not what?

Say what you have to say and quote the legislation as reference afterwards but FFS say it in plain English first. This isn't the Legal forum, please don't bung a whole section of legislation into a post and rely on it and nothing else to make your point.

BMJD

OP have a read through this thread

http://www.boards.ie/vbulletin/showthread.php?p=60840877

Half-rule may be an option for you.

Things you should consider: start by phoning your finance company, ask for a settlement figure (which essentially means the amount you have to pay them to "own" the car). When you have this figure, you need to carefully consider if the half-rule is an option for you (for example if you owe €6k and the car is realistically worth €8k then it isn't a good idea!).

You could talk to the finance company about your plan to buy a new car and see if they are willing to refinance your existing loan along with providing credit for your new car. Do your sums carefully and see if it adds up for you.

Alternatively, you could borrow the settlement figure from the credit union, pay off the finance, then the car is yours to keep or trade-in, sell privately, etc.

BMJD

coylemj wrote: »

It's not what?

Would you do me the courtesy of posting a plain English post please instead of bunging in a whole section of legislation.

It's not a credit default.

coylemj

BMJD wrote: »

It's not a credit default.

What I said was: it's probably still regarded as a credit default or at the very least a credit 'event' that's worthy of note by the ICB

The point being that while it may not legally be a credit default, it could still be noted as a negative under the OP's credit history. You can legally walk away from certain situations but it doesn't stop the lender from throwing mud at your credit record.

Scortho

The loan goes down as cleared. ITs provided for in the legislation and the lender has to agree to it. Now that HP company may refuse you a hp on another car, but they cant use the fact that you returned it under the hp half back rule as a reason for refusing a new hire purchase.
It does not trigger a credit event.

NuckingFacker

Slightly off/on topic, I bought a new 40k vehicle, thinking I was getting a HP agreement. Turned out I'd actually signed a lease.(Was news to me tbh and I didn't get any of the usual benefits of a lease). Anyhoo, the term was 5 years. After 4 years(having discovered(unhappily) there's no "Half rule" on a lease...the repayments were getting dull and I was a tad peed off that I'd been coralled into a lease when all the initial chat was on HP. I asked for a settlement figure, which came back as 9k+.

I un-concurred and ceased all payments, in a snot over being horse-codded-ridden into a lease that was never called a lease when it was signed up to. I offered 3k. They politely(ok, not that politely)declined and issued "threats", dispatched letters, employed their legal teams, issued more stern letters, dispatched a tow-truck(ahem, good luck with that, I offered to allow him return to base with his tow truck if he was polite, really nice and promised never to darken my life again, to which he readily agreed:))

Cue more phone calls and letters. Mostly them offering to accept the 3k as full and final settlement with no credit history issues. I offered 2k, what with the passage of time, etc etc. They gladly accepted and the matter was happily fully resolved. Be careful what you sign up for. Also be careful about accepting finance settlement deals at face value. There's a good bit of wriggle room. Which probably doesn't help the OP one bit..

coylemj

Scortho wrote: »

Now that HP company may refuse you a hp on another car, but they cant use the fact that you returned it under the hp half back rule as a reason for refusing a new hire purchase.

I don't understand the point you're making. A lender doesn't have to disclose the reason when they refuse so they can use any excuse they like.

Scortho wrote: »

It does not trigger a credit event.

They can write on your record: we gave Jim Smith a HP agreement for a car, he returned the car 24 months into a 36 month agreement.

If that is true as a statement of fact then it is bullet proof in terms of a potential action for defamation.

And with that line on his credit record, the likelihood is that no other financial institution will give him a HP agreement on another car.

mickdw

Look if you owe finance on the car, the garage finance people will handle it for you. They will arrange new finance to pay off the original lender. If your trade is worth more than the finance owed, the difference will be your trade in / deposit figure. Its actually a reasonable thing to do in this case when the new finance is going to be at a better rate than existing bank loan.
End result, dealer is left with your trade in that is then free of any bank involvement. You get the new car with all finance amount secured against it. Dealers are doing this everyday of the week. Just be sure you dont cave in too easy on the deal they are offering. There is always more room for bargaining. Fight them on the cost to change and fight them just a hard on the finance rate.

Scortho

coylemj wrote: »

I don't understand the point you're making. A lender doesn't have to disclose the reason when they refuse so they can use any excuse they like.



They can write on your record: we gave Jim Smith a HP agreement for a car, he returned the car 24 months into a 36 month agreement.

If that is true as a statement of fact then it is bullet proof in terms of a potential action for defamation.

And with that line on his credit record, the likelihood is that no other financial institution will give him a HP agreement on another car.

the loan goes down as cleared.
Many people have posted on hear and elsewhere that it didnt trigger a credit event for them.

bazz26

Alot of dealers especially the big ones will run a finance check on the car when you go to trade it in.

BMJD

coylemj wrote: »

What I said was: it's probably still regarded as a credit default or at the very least a credit 'event' that's worthy of note by the ICB

The point being that while it may not legally be a credit default, it could still be noted as a negative under the OP's credit history. You can legally walk away from certain situations but it doesn't stop the lender from throwing mud at your credit record.

It can't be noted as anything other than "completed" on credit history. It's usually Item No. 1 in the terms & conditions of a HP agreement that the agreement may be terminated after x amount is paid. You aren't pulling a fast one, defaulting, doing anything dodgy; it's your right to end the agreement as set out by both parties that you are exercising.

copacetic

coylemj wrote: »

What I said was: it's probably still regarded as a credit default or at the very least a credit 'event' that's worthy of note by the ICB

The point being that while it may not legally be a credit default, it could still be noted as a negative under the OP's credit history. You can legally walk away from certain situations but it doesn't stop the lender from throwing mud at your credit record.

Jaysus, how many people have to point out to you that you haven't a clue what you are talking about either about hire purchase, or what can be put on people's credit records, before you listen and stop posting random silly guesses?

coylemj

copacetic wrote: »

Jaysus, how many people have to point out to you that you haven't a clue what you are talking about either about hire purchase, or what can be put on people's credit records, before you listen and stop posting random silly guesses?

What authority can you quote as to exactly what can and can not be put on a person's credit record?

Do you work for the ICB or what makes you an expert on the topic?

BMJD

coylemj wrote: »

What authority can you quote as to exactly what can and can not be put on a person's credit record?

Do you work for the ICB or what makes you an expert on the topic?

It's simple and straightforward:

The Half Rule
The ‘Half Rule’ is a piece of consumer legislation that entitles you to return your car to the bank who lent you the money if and when you have paid half the ‘hire purchase’ price.

Once returned under this rule your agreement will be ended and you will not be liable for any further payments or suffer any black marks on your credit rating.

Link

The 'half rule'
The ‘half-rule’ is part of the Consumer Credit Act, 1995 and gives you the right to end a hire purchase agreement at any time. Your documentation (the agreement) from the finance company must show the figure for half the hire purchase price of the car. The ‘half-rule’ allows you to end the hire purchase agreement and limits your liability to half the hire purchase price of the car.

Link

And so on.

You can contact the ICB yourself if you want to talk to them about it.
http://www.icb.ie/index.php

MrDerp

NuckingFacker wrote: »

Slightly off/on topic, I bought a new 40k vehicle, thinking I was getting a HP agreement. Turned out I'd actually signed a lease.(Was news to me tbh and I didn't get any of the usual benefits of a lease). Anyhoo, the term was 5 years. After 4 years(having discovered(unhappily) there's no "Half rule" on a lease...the repayments were getting dull and I was a tad peed off that I'd been coralled into a lease when all the initial chat was on HP. I asked for a settlement figure, which came back as 9k+.

I un-concurred and ceased all payments, in a snot over being horse-codded-ridden into a lease that was never called a lease when it was signed up to. I offered 3k. They politely(ok, not that politely)declined and issued "threats", dispatched letters, employed their legal teams, issued more stern letters, dispatched a tow-truck(ahem, good luck with that, I offered to allow him return to base with his tow truck if he was polite, really nice and promised never to darken my life again, to which he readily agreed:))

Cue more phone calls and letters. Mostly them offering to accept the 3k as full and final settlement with no credit history issues. I offered 2k, what with the passage of time, etc etc. They gladly accepted and the matter was happily fully resolved. Be careful what you sign up for. Also be careful about accepting finance settlement deals at face value. There's a good bit of wriggle room. Which probably doesn't help the OP one bit..

People like your dealer are the reason we have broken banks, and people like you are the reason I'm against the idea of debt forgiveness.

How in the hell did you:
1. Not read a monetized arrangement you signed involving a 40k asset
2. Think that a lease payment (presumably around 500-600/month) over e.g. 5 years would add up to 40K + interest and fees?

In your defence though, the dealer was clearly duplicitous. I once had a dealer quote me 6% finance when I struck a deal (I was going to finance a portion of the used car purchase to keep some of my cash) only to put a 17.5% GE Money special in front of me when I went in to pay. I called him on it and he said the 6% dealer finance would have to be on more of the car. Sheesh.

I'm glad you stuck it to them when you realised what was going on.

In general though, I don't think dealers (or anyone providing finance) should be allowed to advertise in a manner such as
"Drive a new 2013 Golf for only 299/month". It's extremely misleading and preys on people who aren't used to reading the small print, and those who think in terms of their monthly income and expenditure only. You have no comeback on what the dealer tells you verbally, and they have your signature on a contract.

All the main dealer websites now deal in these 3-5 year leases and minimum value crap. So it's deposit down and you basically use that and your lease money to match the depreciation of the car from new. 3 years later you don't own the car and you're sucked into another lease because it would cost you the same per month to buy the used car outright as it would to lease a shiny new one. Why would buy the used car over 3 years when you can 'drive' but not own a newer one for 3 years for the same money. Win-win for the dealer, as they earn commission on selling leases from the finance company.

coylemj

A finance company can say on your credit record that you took out a HP loan on a car and invoked your right to hand it back after 50% of the payments were made.

OK, are you still with me? That is a statement of FACT so no matter what you think, it is a valid entry on your credit record and you cannot sue anyone for defamation for saying so. Even without the defence of 'qualified privilege', it is bullet-proof because it is true in all respects.

Now you go to another finance house asking for a HP Loan, they see that entry in your record i.e. you handed back the car before the final scheduled payment. Do you seriously think they will give you a loan?

It's all very well the NCA saying there is no 'black mark' on your credit record, all the finance house has to do is put the bare facts on your record without further comment and you won't get another similar loan.

What you can do (hand the car back) without being sued for breach of contract is one thing, what will keep your sheet clean and get you another loan is another matter entirely.

copacetic

Sweet lord, how many people have to prove you are wrong before you stop making stuff up?

Here is a sample report from the icb,
http://www.icb.ie/pdf/Sample%20Credit%20Report.pdf

There's no way to enter an essay or submit 'factual' sentences. It's nothing to do with defamation it's just not something that can be put in a credit report. Which indicates late and/or missed payments and defaults.

HP agreements end early all the time, there is no way to tell how it ended on a credit report. When you pay off early, use half rule etc, it just shows agreement ended and no missing or late payments or default.

coylemj

copacetic wrote: »

HP agreements end early all the time, there is no way to tell how it ended on a credit report.

Yes there is, there is a 'performance code' applied to every loan registered on your credit record.

It's one of the following....

1 = Kept to terms
2 = Not kept strictly to terms
3 = Not kept to terms but completed
4 = Not kept to terms
5 = Settled early within terms
C = Current-Recently confirmed
? = Code sought on given date, still awaited

http://www.dataprotection.ie/docs/Sample-Credit-File-Record/17.htm

So which code do you think they will put against a HP loan that was terminated early?

copacetic wrote: »

When you pay off early, use half rule etc, it just shows agreement ended and no missing or late payments or default.

So on p.6 of that sample report you provided a link to, it will show that all 24 payments were paid on time - even if the car was surrendered before the 2 years was up? Don't think so.

copacetic

Oh ffs, I give up.

It will say ended early within terms, which is what is says if you trade in and clear finance also. I.e absolutley no difference. It will show every payment that was due paid on time, absolutley no difference from paying off early, trading in and clearing finance or using half rule. Are you really saying that no matter what ending a loan agreement early puts a black mark on your credit rating? Crazy ill informed rubbish.

Every post of yours has been proved wrong and you just make up a new wrong post in response to being proved wrong each time. It's mind boggling.

NuckingFacker

MrDerp wrote: »

People like your dealer are the reason we have broken banks, and people like you are the reason I'm against the idea of debt forgiveness.

How in the hell did you:
1. Not read a monetized arrangement you signed involving a 40k asset
2. Think that a lease payment (presumably around 500-600/month) over e.g. 5 years would add up to 40K + interest and fees?

In your defence though, the dealer was clearly duplicitous. I once had a dealer quote me 6% finance when I struck a deal (I was going to finance a portion of the used car purchase to keep some of my cash) only to put a 17.5% GE Money special in front of me when I went in to pay. I called him on it and he said the 6% dealer finance would have to be on more of the car. Sheesh.

I'm glad you stuck it to them when you realised what was going on.

In general though, I don't think dealers (or anyone providing finance) should be allowed to advertise in a manner such as
"Drive a new 2013 Golf for only 299/month". It's extremely misleading and preys on people who aren't used to reading the small print, and those who think in terms of their monthly income and expenditure only. You have no comeback on what the dealer tells you verbally, and they have your signature on a contract.

.

The dodgy bit of this deal was- a.It was agreed as a HP, not a lease, I could have got a much, much better full maintaining lease with inclusive maintenance and road tax if that was what I wanted, I didn't, I wanted straight HP as I usually pay it off early as suits or invoke the half-rule and get a new vehicle if the yoke is wearing badly etc. Basically, the finance company pulled a fast one. It was the first time they did with me, but a lesson was learned. I used to just sign and hop in, trusting that the accountant etc had done the vetting. I now have a sit down and a good old read.:)

Scortho

coylemj wrote: »

Yes there is, there is a 'performance code' applied to every loan registered on your credit record.

It's one of the following....

1 = Kept to terms
2 = Not kept strictly to terms
3 = Not kept to terms but completed
4 = Not kept to terms
5 = Settled early within terms
C = Current-Recently confirmed
? = Code sought on given date, still awaited

http://www.dataprotection.ie/docs/Sample-Credit-File-Record/17.htm

So which code do you think they will put against a HP loan that was terminated early?



So on p.6 of that sample report you provided a link to, it will show that all 24 payments were paid on time - even if the car was surrendered before the 2 years was up? Don't think so.

eh kept to terms?
It is one of the terms of the agreement of hp that you can return the car at any time under the half rule.
How is that not keeping to terms?

coylemj

5 Settled early within terms.

And because the loan is registered as a HP agreement, that signals that you returned the car under the half rule. Might make it difficult to get another HP deal.

Scortho

coylemj wrote: »

5 Settled early within terms.

And because the loan is registered as a HP agreement, that signals that you returned the car under the half rule. Might make it difficult to get another HP deal.

Or maybe the person paid in full early.
What happens when you pay your mortgage off early if its permissible. I cant see the bank refusing credit on that grounds

I know its not a brilliant example as you cant buy a house on hire purchase (unfortunately...) but the same would still apply.

The bank cant tell whether a person has settled early through the half rule, or settled early by giving the hp provider the outstanding amount.

coylemj

Scortho wrote: »

Or maybe the person paid in full early.
What happens when you pay your mortgage off early if its permissible. I cant see the bank refusing credit on that grounds

I know its not a brilliant example as you cant buy a house on hire purchase (unfortunately...) but the same would still apply.

The bank cant tell whether a person has settled early through the half rule, or settled early by giving the hp provider the outstanding amount.

Technically that's possible but you'd be crazy to pay off a HP agreement early because the interest is front-loaded so unlike a mortgage or a term loan, you can't save money by redeeming a HP loan early.