car finance

[stevec000]

i bought a car 2 years ago on a 4 years intrest free agreement . iwant to buy a new car , can i hand the car back to the finance company .

on my agreement it seems to say its a loan i took out and not a financs agreement

[Loosehead]

Generally no, finance companies are not car dealers. There are 2 possibilities:

1) You took out a loan and bought a car where the car is not connected to the loan ie the lender lent you the money they did not attach it to what you purchased.

2) You took out an HP agreement with the car as the subject.

In the case of 2) the lender would if necessary seek to repossess the car if you didn't pay but would not normally accept it back as payment.

In the case of 1) you could sell the car and repay the loan or trade it in when you buy the new car. In the case of 2) there are several options but as you are going to buy a new car I would suggest offerring your current car as a trade in and explaining to the dealer that there is finance outstanding and they will then arrange for the finance to be paid as part of the deal.

Of course even in the case of 1) you can still trade in if you want.

if this does not cover you situation, explain and I'm sure there is a solution.

[tubeway]

If you buy a car on hire purchase - then once you have paid half of the Total amount payable (the cash price of the car plus the total interest) then you are entitled to return the car to the HP lender - this is a legal right under the Consumer Credit Act 1974. The finance company must be notified in writing, and may charge a REASONABLE amount for damage over standard wear and tear. Certain agreements i.e. personal loans do not permit this - you will have to check with somebody who knows - take your documents to the dealership that you bought your car from and ask the business manager for their advice - any problems post another question - I sold motor finance for 15 years - and I will get back to you

[Oneeyedvic]

Tubeway is correct - if it is a Hire Purchase agreement, under the 'halves' rule you can return the car to the lender. They don't shout about this for obvious reasons.

WARNING - if you do this, some companies will mark the file as "early treminated" as opposed to "settled". This MAY seriously damage your chances of getting another Hire Purchase agreement.

A lot of finance comanies (eg Black Horse) make these agreements loan agreements to get out of the obligations of the Hire Purchase Act.

[tubeway]

At one time early termination did affect your credit rating - but as you are applying your legal right to terminate the agreement - it has been ruled in court that this should not affect your credit score. It may affect your chances to get credit with the same company - but there are so many finance companies around I would not worry about it.