Car Repossession - My Options
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Car Repossession - My Options

Last Updated: Sunday 17th March, 2013

If you experience debt problems, in particular car financing problems, various issues arise - and failure to meet your loan repayments may lead to your hire purchase company repossessing your car. However, you can pre-empt - and prevent - this by considering your options in advance!

Firstly, it's essential that you make the finance provider aware of your repayment problem as soon as practicable, at which point they can explain if and how they can help you with repayment difficulties.

Legally, the lender does maintain the right to reclaim the car if your repayment obligation isn't met. However, they must legally follow due process - firstly the lender must give you a written notice to give you the chance to pay your arrears and put your account back up to date. You'll need to act quickly on this notice though, as the lender need only give you seven days to act.

If you find you aren't in a position to update your account, explain this to your lender. Be aware, however, that they aren't obliged to accept anything less than full arrears payment, and could choose to serve you with a court summons. If the case does go to court, you can at this stage request that the court issues you extra time to organise payment if you do intend to continue with the car hire purchase(HP).

You should know that if you've already paid over a third of the vehicle's total HP cost, the lender is only able to retrieve the car with a court order. If you've paid less, you'll still have some basic protection rights - essentially that, without your express permission, the lender cannot legally enter your property and retrieve the car without a court order.

It's worth bearing in mind that if you anticipate problems with HP arrears further down the line, it may ultimately be less expensive and stressful to simply hand the car back, rather than enter into a lengthy and expensive court process.

Alternatively, perhaps consider ending the HP contract early. If the finance agreement comes to under 25k, you're within your rights to terminate it early and return your car - you'll need to write to your lender to arrange this, and bring your payments total up to half the car's price. (review your contract for the required sums).

If you've already paid more than half on your finance plan, you're only obliged to pay for half of any missed payments, but if you've already paid more than this, you won't be entitled to a refund for the difference. Either way you shouldn't be requested to return the car.

Finally, you've a final option to foreclose your HP loan early and keep the car - to find out how much this will cost, contact the finance company and remember to ask about a rebate on future charges. If you check your credit agreement too, there should be example details of how much an early repayment would cost at different points to your HP contract.

As ever, it's always worth speaking to a financial or debt advice organisation when reviewing your finance options, and make sure you get the expert guidance you need to make the right decision for you.


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