What happens if i hand my car back to the finance company??

Discussion in 'Banking, credit cards, etc' started by liketoknow, Jan 13, 2009.

  1. liketoknow

    liketoknow Frequent Poster

    Posts:
    193
    Hi there, sorry if im posting in the wrong section , please move this if i have mods.
    Im in the unfortunate position of not being able to afford my car repayments anymore. I contacted the financial institution who wanted to know nothing about reducing payments etc.
    I did try sell it for 6k less than i owe and was willing to take the hit of 6k and pay the bank the 6k over a period of time but failed to find a buyer.
    Im now going to write to the bank to tell them to come get the car. i havent missed a payment as yet and i have the money to pay tomorrows payment but after that i wont be paying for it and want them to come and take it.
    My Question is will i be blacklisted for this ?
    What will happen when they take the car ?
     
  2. Speedwell

    Speedwell Frequent Poster

    Posts:
    268
    This is called "Voluntary Surrender". You will have to write a letter to the financial institution stating that you are handing the car back. It will also have to state in the letter that you are liable for any money owed when sold.

    Basically you can do this without a black mark on your credit rating if you have paid a certain amount off your car. Read the T&C of your finance.

    It is essential that you pay tomorrows payment and then when it is closer (perhaps 1 - 2 weeks) before your next repayment is due that you then send in the letter. You must write this letter before your next payment. It will take approx 1 week to 10 days for them to come collect your car.

    If they sell the car for less than is owed you will still have to pay the balance. Hope that this helps.
     
  3. liketoknow

    liketoknow Frequent Poster

    Posts:
    193
    thanks veron,
    i havent paid a third or a half off it so im wondering if i hand it back will i still get blacklisted even if its a voluntary reposession rather than an unvoluntary one ?
     
  4. Speedwell

    Speedwell Frequent Poster

    Posts:
    268
    I am not sure about that. Read your T&C it might say something. Or else ring your finance house and ask them.

    All I do know is you will get black listed if you do not voluntarily surrender the car.

    Sorry for your trouble.
     
  5. Bronte

    Bronte Frequent Poster

    Posts:
    10,296
    I imagine you would be better off selling the car yourself, you will probably get a higher price than the finance company.
     
  6. moneyhoney

    moneyhoney Frequent Poster

    Posts:
    517
    Read this:

    http://www.itsyourmoney.ie/files/publications/p_20080128041858Car Finance Jan 08.pdf

    Don't confuse the 'third rule' with the 'half rule'

    Third rule: If you have paid off less than one-third of the
    hire-purchase price, a lender can take back the car
    without taking legal action against you. A lender can
    only do this if you broke the terms of the agreement
    – for example, if you missed any payments or
    damaged the car. The lender must give you notice in
    writing and must give you 21 days’ notice to fix the
    problem. You would still be liable for the difference between what they sell the car for and what is owed.

    Half rule: Half rule: To end an agreement, you must let your
    lender know in writing that you are ending it under
    the half rule. Having ended the agreement, you must
    pay half the hire-purchase price, less any payments
    you have made to date (including any deposit you
    paid), and return the car.
     
  7. liketoknow

    liketoknow Frequent Poster

    Posts:
    193
    thanks moneyhoney,
    just read that , but it still doesnt say what happens if i vountarily hand over the car. i read my t and cs and they dont say much either
     
  8. moneyhoney

    moneyhoney Frequent Poster

    Posts:
    517
    If you voluntarily hand over the car, you still have to pay up!

    If you no longer want to keep the car, or find that
    you cannot afford the repayments, 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' - see page 14; and
    • pay the cost of any repairs needed if you
    have not taken reasonable care of the car (see
    page 16).

    Half rule: To end an agreement, you must let your
    lender know in writing that you are ending it under
    the half rule. Having ended the agreement, you must
    pay half the hire-purchase price, less any payments
    you have made to date (including any deposit you
    paid), and return the car.

    If you don't tell them it's under the half rule, then they will sell the car, deduct what they get from what you owe them (probably not much) and you will owe the rest. Hard to know what would work out more expensive - how much have you paid off? How much more would you have to pay to reach the half?

    If you sign a “voluntary
    surrender form”, you
    give up your right to end
    the agreement under the half rule. If
    you are giving the car back under the
    half rule, make sure you do not sign a
    voluntary surrender form when you
    leave back the car.
     
  9. delgirl

    delgirl Frequent Poster

    Posts:
    1,311
    We have discovered the hard way that this is only true if it's a personal hire purchase agreement.

    We have a vehicle that we purchased thru our business partnership and are unable to give it back under the half rule as that only applies to consumers.

    We've tried selling it way under market value and unfortunately there have been no takers. The bank isn't interested and will only take it back under voluntary surrender, auction it and we have to pay the balance which could be as much as 10 or 12k.

    OP definitely needs to speak to someone at MABS (1890 283 438), I found them very helpful with information, even though we couldn't get out of the hire purchase agreement.

    OP could also call It's your money on 1890 77 77 77.
     
  10. hairy666

    hairy666 Guest

    personal loan

    i was told by my car company that i had hp but later found out it was personal loan can i vt my car
     
  11. moneyhoney

    moneyhoney Frequent Poster

    Posts:
    517
    Not sure what you mean by vt?

    You can always sell the car & put the money towards the loan & try & make up the rest.