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

  • 18-04-2013 09:20PM
    #1
    Masala
    Registered Users, Registered Users 2 Posts: 3,585 ✭✭✭


    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!


«1

Comments

  • #2
    coylemj
    Registered Users, Registered Users 2 Posts: 26,063 ✭✭✭✭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.


  • #3
    Masala
    Registered Users, Registered Users 2 Posts: 3,585 ✭✭✭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 !!


  • #4
    coylemj
    Registered Users, Registered Users 2 Posts: 26,063 ✭✭✭✭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.


  • #5
    Masala
    Registered Users, Registered Users 2 Posts: 3,585 ✭✭✭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??


  • #6
    bobin fudge
    Closed Accounts Posts: 656 ✭✭✭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


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  • #7
    coylemj
    Registered Users, Registered Users 2 Posts: 26,063 ✭✭✭✭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.


  • #8
    Masala
    Registered Users, Registered Users 2 Posts: 3,585 ✭✭✭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


  • #9
    bobin fudge
    Closed Accounts Posts: 656 ✭✭✭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


  • #10
    AltAccount
    Registered Users, Registered Users 2 Posts: 2,056 ✭✭✭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.


  • #11
    Scortho
    Closed Accounts Posts: 3,871 ✭✭✭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.


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  • #12
    coylemj
    Registered Users, Registered Users 2 Posts: 26,063 ✭✭✭✭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.


  • #13
    AltAccount
    Registered Users, Registered Users 2 Posts: 2,056 ✭✭✭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.


  • #14
    copacetic
    Subscribers Posts: 17,114 ✭✭✭✭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.


  • #15
    [Deleted User]
    Posts: 18,160 ✭✭✭✭ [Deleted User]


    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.


  • #16
    AltAccount
    Registered Users, Registered Users 2 Posts: 2,056 ✭✭✭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.


  • #17
    Scortho
    Closed Accounts Posts: 3,871 ✭✭✭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


  • #18
    coylemj
    Registered Users, Registered Users 2 Posts: 26,063 ✭✭✭✭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.


  • #19
    BMJD
    Registered Users, Registered Users 2 Posts: 2,637 ✭✭✭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.


  • #20
    BMJD
    Registered Users, Registered Users 2 Posts: 2,637 ✭✭✭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.


  • #21
    coylemj
    Registered Users, Registered Users 2 Posts: 26,063 ✭✭✭✭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.


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  • #22
    Scortho
    Closed Accounts Posts: 3,871 ✭✭✭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.


  • #23
    NuckingFacker
    Closed Accounts Posts: 5,221 ✭✭✭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..


  • #24
    coylemj
    Registered Users, Registered Users 2 Posts: 26,063 ✭✭✭✭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.


  • #25
    mickdw
    Registered Users, Registered Users 2 Posts: 23,999 ✭✭✭✭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.


  • #26
    Scortho
    Closed Accounts Posts: 3,871 ✭✭✭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.


  • #27
    bazz26
    Registered Users, Registered Users 2 Posts: 51,877 ✭✭✭✭bazz26


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


  • #28
    BMJD
    Registered Users, Registered Users 2 Posts: 2,637 ✭✭✭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.


  • #29
    copacetic
    Subscribers Posts: 17,114 ✭✭✭✭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?


  • #30
    coylemj
    Registered Users, Registered Users 2 Posts: 26,063 ✭✭✭✭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?


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  • #31
    BMJD
    Registered Users, Registered Users 2 Posts: 2,637 ✭✭✭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


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