Need Another Auto Loan
It can be stressful if you want out of your current car loan, or if you simply dont want the vehicle anymore. This circumstance can be even more frustrating if you have poor credit. It can be tough to find auto financing with a lower credit score, but weve made it easier here at Auto Credit Express.
Weve cultivated a network of dealerships that spans the whole country, and we want to look for a dealer thats signed up with bad credit lenders just for you. Get started with zero obligation and no cost whatsoever by filling out our free car loan request form. Well get right to work finding a local dealership that can assist people in unique credit situations.
Learn The Pros And Cons Of Surrendering Your Car To The Lender
If you can’t afford your car payments, you can give the vehicle back to your car loan lender. But just because you surrender the car doesn’t mean that the creditor has forgiven the debt or that it has to. The creditor can still sell the vehicle and sue you for any deficiency. So, carefully weigh your options, and the pros and cons of each, before you take action.
Have Someone Else Take Over Payments
Finally, you can try to find someone to assume your loan payments along with the car. You can advertise in market places such as Craigslist and eBay Motors to find potential buyers.
The person who buys the vehicle would assume ownership of the vehicle and they’d assume responsibility for the loan as well. But the dealership may require them to apply for financing, complete with a credit check, before they can take over the loan. If they don’t have solid credit, this option might not be doable.
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What Is A Deficiency
If you return the car to the lender, the lender will likely sell it. It will apply the proceeds of the sale to your car loan balance, after reimbursing itself for the costs of sale and certain fees. However, often the sale proceeds aren’t enough to cover your loan balance the remainder of the loan amount is called the “deficiency.”
The car loan lender can then demand payment of the deficiency. If you don’t pay up, it can sue you, get a judgment, and then use various collection methods, such as wage garnishment or bank levies, to get paid.
What Is Hp Finance
Hire purchase is another popular option for car finance agreements. With this sort of agreement, you normally have to pay an initial deposit of around 10% of the total cost. This is then followed by monthly repayments. When youve finished your monthly repayments, you then gain ownership of the car. There is no balloon payment required to own the car, unlike with PCP agreements. However, there is a small Option to Purchase fee that covers the admin required to transfer the title of the vehicle to your name. HP is a secured loan, so it is tied to your car. Therefore, if you dont keep up with repayments, your car can be taken away.
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Risks Of Voluntary Termination
The main downsides depend on how much of the finance youve paid off and what damage the car has sustained in the time youve had it. We advise you to periodically taken photos of the vehicle, which are time-stamped, so you can mitigate any claims the finance company makes for more than wear and tear. Since the wording in the contract is deliberately vague, you find yourself with additional fees, if you dont cover yourself.
If the car is worth more than the remaining payments, you could be better off paying a settlement figure to buy the car and then sell it. However, youve got to be able to access the funds to do this and if youre terminating for reasons of financial difficulty, this may not be an option.
Its also worth bearing in mind that the finance companies consider exceeding the agreed mileage limit beyond normal wear and tear. Remember, mileage is worked out and agreed based on monthly usage, so they may charge you based on a pro rata calculation.
Reasons For Returning A Vehicle
There are a number of reasons why you may need to return a financed vehicle. Returning a car could make sense in any of the following scenarios:
- You can no longer afford the monthly payments and want to avoid repossession.
- You purchase a new or used car only to realize shortly after that it’s a lemon.
- You believe you overpaid for the vehicle and would like to look elsewhere for a car.
- You move to a new city and no longer need the vehicle.
- You simply changed your mind about the purchase.
Trading the vehicle in for a less expensive car is something to consider if you still need a car but can’t afford the one you have. You’d still have a car loan payment. But if the vehicle is less expensive, the new payment may be more affordable for your budget than the previous one.
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What To Watch Out For When Ending Pcp Or Hp Early
If you use voluntary termination to end your agreement early, itll show up on your credit file. There will be no record of why the agreement was ended. It will make little or no difference to your overall credit score, so is a much better route to take than missing payments, which could have an impact on your credit file, making it difficult to borrow money in the future.
Using voluntary termination frequently to return cars early can look bad on your credit file though. This is because it costs finance companies more to end agreements early.
Because companies lose money when you end agreements early, it means theyre often not very supportive when you want to get voluntary termination. They might want to make the process last as long as possible.
To avoid this, send them a letter explaining youre applying for voluntary termination. You dont need to sign documents or fill out termination packs. Citizens Advice provides a template letter for this.
You might also find the finance company wants to give you a penalty based on the mileage of your vehicle. This will be because youve done more miles than they expected. Legally, they can’t charge you a penalty for this if youve taken reasonable care of the car.
For more information on car finance and voluntary termination, see The Car Expert website
Cancelling Car Finance After 14 Days
If you want to cancel your car finance after the 14-day cooling-off period, youâll essentially be paying off the arrangement early and will be bound by the terms of the credit agreement.
Hire purchase car finance, conditional sales and personal loans may charge an additional fee for early repayment, but you should save on interest when paying off the agreement early.
PCP car finance contracts are a little more complicated because of the way this type of finance works. The thing to remember about PCP finance is that youâre making fixed payments on the depreciation value of the car. This means the remaining balance left to pay could be more than what the car is actually worth. This is known as negative equity.
If you cancel your finance in this situation, itâs likely that your lender will ask you for additional payments, to make up the difference between whatâs owed and the carâs value.
If you want to cancel any credit agreement after the 14-day cooling-off period, youâll need to get in touch with the lender and ask them for an âearly settlement figureâ. This is the total amount youâll need to pay to clear the finance agreement in full, including any interest and fees.
The lender will tell you how much you need to pay to clear the finance and youâll then have 28 days to make the repayment.
You might also be able to pay off part of the loan to help reduce the interest you owe.
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When Should I End My Finance Deal Early
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There are a few main reasons why you might want to exit your car finance deal early:
- youre struggling to meet the finance payment each month possibly due to a change of circumstances such as redundancy
- you believe you can reduce your costs by ending the deal early and buying a car a different way
- you no longer need the car.
Before You Buy Or Lease A Car
- Get a copy of your credit report before you visit the dealership. Visit www.AnnualCreditReport.com or call 1-877-322-8228 to get a free copy. Your has information that affects whether you can get a loan and how much youll have to pay in interest to borrow money.
- Get an out-the-door price of the car in writing before you visit the lot, and before you talk financing with the dealer. That means getting the dealer to send you the total price of the car, before financing, including taxes and fees. Having this info in writing before you go to the lot will help you compare offers from different dealers on an apples-to-apples basis, more easily catch extra charges and add-ons that may slip into your deal, and keeps your attention on the total cost .
- Know your total cost, not just the monthly payment. Low monthly payment offers can be tempting, but dont focus solely on your monthly payment. For example, lower monthly loan payments often require longer terms and higher interest rates, which will substantially increase your overall cost. When calculating what you can afford, use the Make a Budget worksheet as a guide to make sure you have enough income to cover your monthly expenses and a car payment.
- Consider saving for a down payment first. A down payment reduces the amount you need to finance or lease. That will lower your total financing or leasing costs.
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Can Voluntary Termination Impact On My Credit Score
If you cant keep up with your monthly car finance repayments, you might be tempted to simply stop paying. However, this will only make the situation worse by harming your credit score, making it harder for you to borrow money in the future. You could also be hit with bigger . So, if youre struggling to keep up with payments, voluntary termination is likely the best option to keep your credit rating high and your debt low.
Its important to remember that voluntarily terminating your car finance agreement wont get you any money back. So, if youve paid 65% of the total finance amount, you wont get the 15% extra that youve paid refunded to you.
Can You Return A Car You Just Bought
In general, you can’t return a car you just bought. As soon as you sign the sales contract, the purchase is legally binding. If you’re experiencing buyer’s remorse, you could contact the dealer and ask, but there are no guarantees. If the car is a lemon, you can typically return it once it’s been established that the car has ongoing issues.
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Can Your Car Be Repossessed
With a PCP, your car can be repossessed if the terms of the contract are broken, for example, by missing repayments. If you have paid less than one-third of the purchase price, the car finance company can take back your car without taking legal action against you. If you have paid more than one-third of the purchase price, a lender cannot repossess the car without taking legal action. In addition, the car cannot be repossessed from your driveway, regardless of how much money youve paid back.
If your car is repossessed, the finance company will generally sell the car and the money goes towards the outstanding debt, but you will still have to make repayments until the entire debt is paid off.
If you are struggling with debt, check out our debt action plan.
Get A Cheaper Car Insurance Policy
You can reduce how much you spend on car insurance by up to 70 percent by switching to another company. Using an insurance comparison website like Insurify, you can compare insurance quotes from up to 20 different companies side by side, all in one place. Insurify also applies any discounts you may be eligible for, which will further reduce your monthly premiums. This will ease your financial burden, allowing you to allocate more toward your auto loan.
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Returning A Car To A Dealer
The hard truth is that most auto dealerships arent going to let you return a vehicle that you’re financing. Some dealers have a return policy sometimes around a seven-day guarantee when youre financing a car sight-unseen without a test drive but most dont offer one. It doesnt hurt to give your dealer a call and ask, but most franchised dealerships dont have return policies.
When you finance a vehicle with an auto loan, the cars title has a lien on it, which names the lender as the lienholder. This gives them ownership rights and prevents you from selling the vehicle until the loan is paid off.
Once the loan is complete, the lien is removed and the car is yours. If you need to get out of the auto loan before your loan term is over, you can sell the vehicle privately or to a dealership and pay off the car loan.
Selling the vehicle to a private party may get you enough money to pay off the auto loan pretty easily, but if not you have to pay the remaining balance out of pocket to release the lien from your lender. If you try to sell it back to the dealership, they may not offer you as much as you can get through a private sale. Trade-in values are typically less than the actual cash value of the vehicle.
What Does Voluntary Termination Mean
So, ending your PCP or HP deal means youll be voluntarily terminating your agreement but what does this mean? And does it cause you credit score problems going forward?
The term voluntary termination comes from Section 99 of the Consumer Credit Act 1974 a part of the law that was created to protect people who could no longer afford to pay their monthly repayments. That said, the law is balanced so it also prevents finance companies having to foot the cost if someone just walks away from their agreement at any time .
You are required to give your lender written notice of your intention to terminate the agreement and its important that you do so, as simply not paying your finance can lead to the voluntary surrender of your car which is a very different process.
Under a voluntary surrender, the finance company will have your car recovered and then sold at auction. Youre likely to be charged heavily for the logistics involved with surrendering your car and, if the car doesnt sell for the full outstanding amount, youll be pursued for the outstanding balance.
While voluntary termination generally wont have a negative impact on your credit score voluntary surrender will, so its an option best avoided if at all possible.
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Car Finance: Voluntary Termination Of A Pcp Or Hp
A guide to voluntary termination of your car finance agreement. What legal rights do you have?
Voluntary termination is one of the most misunderstood aspects of PCP car finance, so weve put together this comprehensive guide to explain your right to end your agreement early if you need to.
We have previously explained the ins and outs of settling a PCP early, but here were looking at a different option for ending your PCP before the end of your contract.
This guide will explain what a voluntary termination is, why it exists and how to go about cancelling your agreement by VT. Well also answer a couple of the most common questions about voluntary termination.
Voluntaryterminationof a car finance agreement
Your Dealer Has A Return Policy
You may want to return your car simply because you dont like it, and occasionally the dealership you purchased it from will have a return policy. For example, CarMax has a thirty-day return policy. If you dont like the car, you can exchange it for one you do like or get a refund.
In addition, some dealerships have exchange programs where you have a limited number of days to exchange the vehicle.
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How Do I File A Complaint Against A Car Dealership
Were you deceived by a car dealership? Sadly, some used car sales involve deception or fraud. The annual value of auto fraud may be as high as $6 billion this year. You have rights when it comes to buying a car. If the dealer engaged in a deceptive or fraudulent practice to persuade you to buy a vehicle, then you can file a complaint against them. Here are the steps:
- Sue the dealer with the help of an auto fraud attorney If you have talked to the dealer and tried to resolve your complaint to no avail, and the amount in dispute is MORE than $10,000.00 the next step would be to contact our auto fraud lawyer to determine if you have a case for a lawsuit.
- Sue the dealer in small claims court If you have talked to the dealer and tried to resolve your complaint to no avail, and the amount in dispute is less than $10,000.00, the next step would be to contact our auto fraud lawyer to determine if you have a case for a lawsuit that you can file yourself.
- File a complaint with your states consumer protection agency If youve exhausted your options with the dealership directly, you may file a complaint with your states consumer protection agency. The number to call varies by state, but you can find your states informationhere.