Author by : David Riches
Voluntary Termination (VT)
VT is available on personal contracts (such as PCP,HP). It allows your consumer right to terminate the contract of a vehicle (and return it to the lender) after usually 50% of the financed capital has been repaid.
For some years, some finance brokerages have been advising voluntary termination as an effective way of disposing of your current vehicle within a finance contract.
It is your consumer right to do so, but this doesn’t mean that it doesn’t come without its consequences. Although VT is not a default or CCJ and wont show as such on your credit file, potential lenders WILL be able to see that you have terminated in the past. This is a bad thing….
WHY?
Put yourself in the shoes of the lender. Your business is the lend money against vehicles. Your business is not second hand vehicles. Lenders do not have massively effective means of disposing of such vehicles (usually car auctions where vehicles will fetch less than market value). So if the potential client has a history of VTing vehicles, this can be a much worse risk than a default in their history.
Finance companies or lenders are geared toward recovering defaults, they have strict, proved methods of recovery, eventually resulting in court judgments (CCJ’s), whereas a judge and courtroom will not sell a second hand vehicle terminated before the end of the contract.
Simple rule is:
If you are not at the end of your specified term within the contract to terminate under normal conditions - DON’T DO IT!.
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For more information and advice on this subject, please visit my car leasing website at http://www.alphaleasing.co.uk. |
[tags]car leasing,voluntary termination,pcp,hp,personal contract purchase,hire purchase[/tags]
