If you bought your car on HP, and now, due to changed circumstances, the car is in danger of being repossessed, or, if you simply can no longer afford to keep it, want it, or need it, you may wish to consider surrendering it back to the finance company under the
Half Rule
To end a HP agreement, you must let your lender know in writing that you are ending it under the half rule. Having ended the agreement, you must pay half the hire-purchase price, less any payments you have made to date (including any deposit you paid), and return the car.
The example below shows how this might affect Joe if he ends his hire-purchase agreement after two years, or after three years.
Example 1
(1) Half the hire-purchase price of €16,390.69 = €8,195.35
Less: Amounts paid off to date:
25 payments of x270.92 6,773.00
Deposit 400.00
Documentation (or set-up) fee 72.00
(2) Total paid so far 7,245.00
Amount Joe still owes (1) - (2) (8,195.35 less 7,245.00): €950.35
.
Month 25 : Joe sends his lender written notice to end the agreement and arranges to give back the car. If he ends the agreement in month 25, Joe will have to give back the car. He will owe an extra €950.35 to bring his payments up to half the hire-purchase price.
Example 2
Month 37 : If Joe wanted to end his hire-purchase agreement in month 37, he would just have to send his lender written notice and return the car. As Joe has already paid more than half the hire-purchase price, he does not owe anything else. (Although, he
would have to pay off any instalments that he still owed at the date he ended the agreement, if there are any).
Half the hire-purchase price of €16,390.69= €8,195.35
Less: Amounts paid off to date:
36 payments of x270.92 €9,753.12
Deposit + 400.00
Documentation (or set-up) fee 72.00
Amount paid to date €10,225.12
Joe has paid more than half the hire-purchase price, so he does not owe anything else. However, he does have to return the car to end the hire-purchase agreement and tell the lender he is giving the car back under the half rule.
If Joe had signed a voluntary surrender form (see below) giving up his right to end the agreement under the half rule, he would have to pay the balance on the hire-purchase agreement of €6165.57
Take care, whatever else you do,not to sign a voluntary surrender form.
Finally, giving back a car under the half rule should have no effect on your credit record. You have simply availed of your entitlement to terminate a loan, similar to giving back a vehicle at the end of a lease.
Much more info here
http://www.itsyourmoney.ie/files/publications/p_20080128041858Car Finance Jan 08.pdf
Hope this brightens up someones New Year!
Murt
Half Rule
To end a HP agreement, you must let your lender know in writing that you are ending it under the half rule. Having ended the agreement, you must pay half the hire-purchase price, less any payments you have made to date (including any deposit you paid), and return the car.
The example below shows how this might affect Joe if he ends his hire-purchase agreement after two years, or after three years.
Example 1
(1) Half the hire-purchase price of €16,390.69 = €8,195.35
Less: Amounts paid off to date:
25 payments of x270.92 6,773.00
Deposit 400.00
Documentation (or set-up) fee 72.00
(2) Total paid so far 7,245.00
Amount Joe still owes (1) - (2) (8,195.35 less 7,245.00): €950.35
.
Month 25 : Joe sends his lender written notice to end the agreement and arranges to give back the car. If he ends the agreement in month 25, Joe will have to give back the car. He will owe an extra €950.35 to bring his payments up to half the hire-purchase price.
Example 2
Month 37 : If Joe wanted to end his hire-purchase agreement in month 37, he would just have to send his lender written notice and return the car. As Joe has already paid more than half the hire-purchase price, he does not owe anything else. (Although, he
would have to pay off any instalments that he still owed at the date he ended the agreement, if there are any).
Half the hire-purchase price of €16,390.69= €8,195.35
Less: Amounts paid off to date:
36 payments of x270.92 €9,753.12
Deposit + 400.00
Documentation (or set-up) fee 72.00
Amount paid to date €10,225.12
Joe has paid more than half the hire-purchase price, so he does not owe anything else. However, he does have to return the car to end the hire-purchase agreement and tell the lender he is giving the car back under the half rule.
If Joe had signed a voluntary surrender form (see below) giving up his right to end the agreement under the half rule, he would have to pay the balance on the hire-purchase agreement of €6165.57
Take care, whatever else you do,not to sign a voluntary surrender form.
Finally, giving back a car under the half rule should have no effect on your credit record. You have simply availed of your entitlement to terminate a loan, similar to giving back a vehicle at the end of a lease.
Much more info here
http://www.itsyourmoney.ie/files/publications/p_20080128041858Car Finance Jan 08.pdf
Hope this brightens up someones New Year!
Murt