does this affect your credit history?
General Fiat Finance - Help!
- Thread starter RobTuck
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General Fiat Finance - Help!
does this affect your credit history?
Nope, not allowed to affect your history.CheersGC
You've just described a PCP (Personal Contract Purchase) not HP.
HP is a straightforward loan with fixed equal monthly payments over a fixed term with nothing left to pay after all the monthly payments have been made.
Ending your agreement early in this way is called a Voluntary Termination.
If you do it 'VT' appears on your credit history.
rallycinq is correct in that finance companies are not allowed to reject any future applications because of it, so they just find another reason.
If anyone gets to a point where they just cannot afford to keep up the payments on a car and are considering a VT you would be much better advised to sell the car to a dealership for the outstanding amount. You still walk away with nothing, but it won't affect any future credit applications.
I have done a VT on 2 or 3 cars and never had a problem getting finance or a loan (including the cheapest loans on the market that they only give to those with good ratings). The whole point is you do the VT if/when you are in negative equity (i.e you owe more than the car is worth). Part ex-ing the car in this scenario is the worst option because this gives you the lowest figure for your car, you would be better to VT, or poss sell privately to minimise your loss and then buy you new car for cash. Bear in mind though that, like with your mortgage, repayments are heavily front loaded with interest, rather than paying back capital, therefore your 'true' rate of interest part way thru the loan will be higher than the quoted APR
So have lots of people, that's why most finance companies are now slowly moving away from HP onto Personal Loans, which don't give you the option of doing a Voluntary Termination.
Lenders are far from stupid, and will do anything and everything they can to ensure that the risks they take are at an absolute minimum. Legal right or not, they are far less likely to lend you money if you've done a VT in the past.
I didn't mean a balloon payment, look closely at the next HP doc your effingeye man does and you will see an 'option fee'. This is technically the option to purchase fee meaning that the hire purchase period is over, its usually rolled into the last payment. I think Black Horse are around £35 to £50 at the moment.
Cheers
GC
Last edited:
Sorry, I misread your post.
Early settlement is different to Voluntary Termination in that you get to keep the thing the loan was used to pay for.
With VTs the lender often ends up with a car worth less than the amount outstanding on the loan and the added hassle of having to send it to auction. With Personal Loans they never have that problem.
Oh right, cheers for that Scrogg... I have a somewhat fried brain today.
