We all go through rough times and often worried about how we are going to manage our payments. The situation may get worse if you have taken car finance. It isn’t easy to continuously make payments on time while you are struggling financially. In such circumstances, you surely would want to know your options. Whether or not you can escape the car finance agreement and how? Evading the agreement is the best solution when you are unable to manage it.
Why Getting Out is the Best Solution?
Getting out of the agreement is a great idea because it will have an impact on the credit score. Moreover, failing to make payments makes it hard for you to secure credit the next time. So it is better to get advice from a Car Dealer in Ashton Under Lyne than further sink in. You can always return the car in such situations.
However, there are certain conditions attached to this procedure. So it is advised to know alternatives before you make a choice. It is better if you keep the following options in mind.
Type of Agreement
There are two different finance agreements i.e. Hire purchase and Personal Contract Purchase. In the Hire Purchase (HP), you have to pay a down payment. After that, the interest and remaining balance are paid in installments. Whereas the PCP allows you to pay lower installments over a contract. But, the final installment is usually enormous and known as the Balloon payment.
Conditions for Ending the Agreement
According to UK Law, consumers have can end a car finance agreement early. You can either return the car or pay off the installments early. However, you cannot end it unless you have paid a finance company about 50% of finance. Any additional fees and interests will also be included in this payoff.
Another condition is that the car must not be damaged. There has to be no severe wear and tear or excessive mileage. Your finance company may charge for any damages.
Ending the Agreement
Generally, the credit agreement includes a complete price and credit plan. It also includes the amount that will be paid in case one decided to return the car. This returning process is known as ‘voluntary termination’.This applied to both, on Personal Contract Purchase and Hire Purchase.
In case you have paid 50% of the cost, you can get benefit from the Consumer Credit Act 1974. You can end the agreement and don’t have to pay any extra amount. However, if you are far behind the 50% mark, you are required to pay the asked payment. In case you have paid more than this, say 70%,you are not entitled to get it back. Hence, you cannot refund the extra 20%.
Early Settlement
You should bear certain things in mind in case you are going for an early settlement. Ask your finance provider for a settlement amount. The amount that your financer can ask for an early settlement is also covered by the UK law. However, early repayment also depends upon your credit agreement conditions.
How Early Settlement Works?
In case you have a Personal Contract Purchase, it is wise to let it run the course. Usually, it costs negative equity when someone is going for an early settlement. On the other hand, settling the Hire Purchase agreement is easy. A person can go for it by paying the interest and the remaining amount. Before the end date, you can also avail of a rebate by paying the dues before the end date.
