Sorry tale of hire purchase

[Alex.]

I'm just wondering if anyone's had a similar experience or had any suggestions on this depressing tale...

A few years ago my son-in-law traded in a Discovery for cash at a dealer -not a LandRover one I hasten to say -, he needed to get the HP agreement off his credit report so that he could get a new mortgage. He didn't buy another car, just took the cash. Dealer was to pay off the outstanding debt. Credit report was cleared, mortgage went through, everyone was happy.

Recently he had a letter from the finance company saying the debt had only been partly paid off, they had been setting what the dealer paid them against the monthly payments and son-in-law still had a debt of around £10K outstanding. He's seen a solicitor who says that he is the principal debtor and trying to claim against the dealer (who's now bankrupt of course) would likely cost more than the debt.

So s-i-l now has the dreary prospect of paying off the HP on a car he sold in good faith years ago, and the fraudster can hide behind bankruptcy and (probably) set up another dealership and scam more customers.

Alex.

 

[skotl]

That sucks, Alex - sorry to hear that.

But it's a salutary lesson - the HP agreement is between the original two parties and one party can't simply reassign responsibility for it without the other party agreeing to it. The dealer was clearly dishonest when he said he would take the agreement on.



If he has paperwork, then it may be possible to pursue a civil case against whoever in the dealer signed that paper. Worth a trip to Citizens Advice to see what they suggest. They may also be able to hook your son up with someone who can negotiate a less onerous settlement with the finance company.

 

[the snooper]

The story here is never trust anyone always get the cash and pay off any outstanding amounts your self

 

[pedrobedro]

Who has the Discovery now, does the finance company have any claim on that if your son in law doesn't pay ?

 

[Justme]

The story here is never trust anyone always get the cash and pay off any outstanding amounts your self

Legally you cant sell it till you own it.

The reality is thats how everyone does it.

 

[Kent]

Now things have changed a bit
However the finance house can maybe repossess the landrover off whoever owns it

The dealer committed a criminal offence in selling it with knowledge that the hp company were not paid off. Likely he has more such things again st him though and couldn't give one

 

[ibrooks]

So your son-in-law is still paying for the Discovery.... when he has cleared the debt he'll presumably own it and have a right to take it back from whoever the dealer sold it to.

The dealer surely sold stolen property since it didn't belong to them? Or at least it was obtained by deception.

The dealer gave your son some money - if they would like to crawl out of the woodwork and try to suggest it was in return for the Discovery then they should feel free and once they stick their head above the parapet they can help to sort the mess with the finance company regarding why they didn't settle up with them as agreed. They can also return the money that they took from the existing "owner" in exchange for a car that doesn't belong to them.

Strikes me that your son-in-law should be looking to get the car back. He'll either have what he's paying for or prompt the pond-life to show up.

Rough on the new "owner" who has presumably bought it in good faith but it will at least prompt them to make a complaint to the authorities about the dealer and maybe force some action. It might well also be covered by their insurance or credit card protection etc. so at least they would get their money back.

 

[armalites]

I think it's pretty common these days, I read a thread on another forum (a Discovery one interestingly) where a member had to get rid of his because the mortgage company weren't happy about the large monthly payment. He got rid, got the mortgage then bought another!

 

[printcom]

Mortgages are usually granted on the ability to pay, outstanding finance can get in the way - its not uncommon for them to insist that they are settled before making an offer. Its all part and parcel of the government wiping our backsides for us.....

 

[printcom]

Good point..

 

[ibrooks]

Surely the new owner would've done a hpi (other services are available) check?

Why was having a car finance agreement an issue for a mortgage too? If the mortgage really did hinge on the presence or lack of car finance, the dealer must have done something to clear it?

When people buy from a dealer they often don't do an HPI check because they assume they have comeback on the dealer who will have done the checks because they don't want to be selling stolen stuff. Generally a dealer will HPI their stock as a matter of course to make sure they aren't selling stolen stuff so it works. Then you come across a dodgy dealer who doesn't do what most would call due-dilligence or who does outright dodgy stuff as seems to be the case for the OP and it all goes to poo - often with the dealer having done a runner with the profits before it comes to light.

 

[Alex.]

I think pdg has pointed out the most puzzling aspect - if the mortgage company were satisfied, what had the dealer done to clear the HP debt that involved NOT paying the full amount?? The only thing I can imagine - I admit it's far-fetched - is that he sent a rubber cheque to the HP company who showed the debt as settled before they found out. And the mortgage company checked s-i-l's credit rating during that brief period, saw everything in order and went ahead.

 

[cumbriasteve]

I doubt he can easily reclaim the car back either, once it changes hands from the dealer the new owner technically becomes the legal owner (sort of) even if the dealer had no right to sell it and the car was on HP still.

It's not cut and dried though, the new 'innocent' owner has to prove they made an effort to ensure the car was clear of finance and it may well end up in court with 'anybody's guess' who would win, also even if they win there can be a problem if they try to sell or part ex the car and an HPI will reveal there is still outstanding debt on it.

It's been like that for over 40 years and not many people know and simply hand over the car if challenged by the big nasty finance company.

 

[Wozzaaah]

I doubt he can easily reclaim the car back either, once it changes hands from the dealer the new owner technically becomes the legal owner (sort of) even if the dealer had no right to sell it and the car was on HP still.

It's not cut and dried though, the new 'innocent' owner has to prove they made an effort to ensure the car was clear of finance and it may well end up in court with 'anybody's guess' who would win, also even if they win there can be a problem if they try to sell or part ex the car and an HPI will reveal there is still outstanding debt on it.

It's been like that for over 40 years and not many people know and simply hand over the car if challenged by the big nasty finance company.

According to the consumer credit act, if someone buys a car in "good faith" and it's later found to have outstanding finance on it it cannot be repossessed.
It can only be repossessed if it's been stolen or is subject to a lease or hire agreement.
My car had outstanding finance on it when I bought it but I had no idea, I simply sent all the details I had for the seller to the finance company and they wrote back saying they no longer had an interest in the vehicle.

 

[printcom]

Interesting thread, sounds like the bottom line is do a HPI check before you buy and pay any outstanding finance off yourself when you sell.

 

[windingroads]

When your son got the money, was it not up to him to pay off for the loan,
or am I missing something.

 

[pedrobedro]

When your son got the money, was it not up to him to pay off for the loan,
or am I missing something.

Not if the buyer agreed to settle the balance and got it for a lower price. My friend at the bike shop does it so he knows the balance has been paid and he will have no come backs.

 

[premmington]

Interesting post...

I am in the motortrade, I cannot really understand how the motoring public gets in such a mess sometimes.

Bottom line is they have too much trust in dealers.

 

[Bill Edwards]

Interesting post...

I am in the motortrade, I cannot really understand how the motoring public gets in such a mess sometimes.

Bottom line is they have too much trust in dealers.

Well there's the thing, people trust dealers.
Fact is that there will be straightforward ones out there but there's a lot that aren't, and not just in the motor trade - same applies with almost everything, horses, tractors etc.
Generally if you buy from a dealer you're paying a lot more than it would be in a private sale, if they're honest this gets you a properly looked over and warrantied vehicle and if they aren't it gets you a more expensive vehicle without comeback or if they're very crooked one that they've bodged so it starts and drives off the forecourt after which point it's your problem.

Dealers are all out to make money (which is fair enough or there'd be no point doing it) but some have no morals whatsoever and will happily and deliberately rob the customer.
It's possible to make a decent living honestly. But it's far easier to make a much better living dishonestly.

 

[mpats]

When we got our mortgage just over a year ago they wanted to know all our outgoings, and see bank statements for the same before offering a mortgage. But I don't believe they went to the trouble of checking with the finance company to see how much was still owed on my car.