Hire Purchase

Ask them. I'd think you always retain the option of not paying them a lump sum at all, but just carry on paying 14 monthly payments. If paying off a lump sum, I'd expect the total would be reduced by only between 6.6% and 9% of the total interest which would have been payable on the whole 4 year loan.

Alternatively, use the situation as a bargaining lever. Remember, they will be keen to get your business for your next car.

"Ronald Raygun" wrote

What about the provision in (most/all?) hire purchase contracts - that as long as at least 50% of total payments under the contract (including any initial deposit) have been paid - that the car user can simply hand back the keys to the HP company & walk away without paying another penny?

I believe the vehicle has to be returned in a reasonable condition, rather than a crumpled heap? :)

Well, the HP co would presumably get the insurance payout in that case. This would leave the buyer short-changed because presumably the write-off value for a less than 3 year old car should significantly exceed the amount owing if almost 3/4 of it has been paid off. The buyer would therefore not expect to walk away empty-handed.

It would depend on the exact circumstances.

Quite a few cars can struggle to achieve an RV (Residual Value) of 50% of purchase price (especialy if the purchase was at or near List Price), even with average mileage, after 3 years. Some are nearer 30% RV.

The HP deal might have had a low deposit and/or high interest rate.

I am not sure how keen the HP company would be to give any of the "surplus" insurance proceeds to a Hirer.

Are such car-purchase agreements really 'hire purchase' rather than credit sales? I thought the usual car finance deal was that you get a loan, perhaps secured on the car, and you use that loan to buy the car. The carf is yours not the finance comanpy's.

Robert

My thoughts exactly. I was under the impression that genuine HP is well out of fashion, probably by about a couple of decades.

No. What happens is that you hire the car from the finance company for the stipulated term and then have the option to purchase the car at the end for a nominal £1 payment. That's why it's called "Hire Purchase".

Without a hint of irony, Ronald Raygun astounded uk.finance on 15 Dec 2004 by announcing:

No; the car belongs to the finance company until the loan is settled. It may be possible to get a secured loan in which the security is the property of the borrower, but I haven't come across such an agreement. My previous car belonged to the finance company and my current car would also have done so if I hadn't got a cheaper personal loan in the end.

How ?

Is it interesting ? Lot of blood and stuff ?

Most peoples confusion is probably due to their own name appearing on the V5. I bought a volkswagen on finance in 2000. the V5 showed me as the registered keeper, but it was on HP, and the agreement stated that I was not the legal owner until I had made the 36 payments. The proof of this is in the option to give it back after you have made 50% of the payments, how could you do that if its yours?

The options schemes that are available mean that you never actually pay the full value until you choose to keep it and make the final payment. Then you own it.

John

Yes, more interesting than paint drying anyway. :)