Trust Deed Forum - Repaying Early & Hire Purchase Car
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 Repaying Early & Hire Purchase Car
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3 Posts

Posted - 03 July 2018 :  14:42:06  Show Profile  Reply with Quote

I am currently one year into my 4 year TD agreement. I am paying roughly £100pm, meaning that I will be repaying approximately £3.6k over the next three years of a total of £9-10k debts. I am considering selling my car next February after my Hire Purchase ends, I have an estimated value of just under £5k - I appreciate this is more than I am likely to pay if I continue my monthly contributions. In your own opinion, is it worth me pursing this idea to offer a one-off payment, or should I offer less than the full amount (i.e. the remaining amount that I will be due at the time I come to sell my car.

I was also wondering what the likeliness is of getting another Hire Purchase if I do pursue the above? I have shown my current Hire Purchase that I am able to commit to my payments and have never been late or missed any previous payments on my current car, and I would be looking to get a car that does not cost as much so that I can reduce my monthly payments on the car. I had a parent co-sign my agreement as a guarantor previously.

Thanks for any advice that you can provide.

TDA (Debt Adviser)
Trust Deed Expert

12803 Posts

Posted - 03 July 2018 :  15:21:00  Show Profile  Reply with Quote
Hi KSTrustDeed.

You can sell the vehicle and your trustee is likely to expect some or all of the funds to be paid into your trust deed.

This will not bring the trust deed to an early end though. This can only happen if you repay the full amount of the debts, interest on the debts, and your trustee's fees. This will likely add up to much more than the £9,000 to £10,000 of included debts that you mention.

Car finance may be available while you're in a trust deed, but the interest costs are likely to be high and it may require your trustee's permission to be given to the finance provider.

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Kevin Mapstone
Trust Deed Expert

3675 Posts

Posted - 06 July 2018 :  16:43:35  Show Profile  Reply with Quote

This isn't how Trust Deeds work. Your creditors haven't agreed to accept a certain amount from you, they have agreed to accept whatever you can afford over the next 4 years, along with any lump sums that may come your way.

As such, I imagine you will either have to pay in the proceeds for selling the car or, if you keep the car instead, then your monthly payments to the Trust Deed are likely to increase as you are no longer paying the HP cost each month.

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Advanced Contributor

134 Posts

Posted - 11 July 2018 :  14:30:48  Show Profile  Reply with Quote

I can see why you would think along the lines of selling the car and then using the funds to pay off the balance of what you think is your financial obligation but as TDA and Kevin have pointed out it doesnít quite work like that unfortunately.

As they have advised to end your Trust Deed early and receive your discharge you need to pay back your full debts, plus interest and costs minus any money you have already paid into the pot for the creditors. This would be more than the original debt level of £9,000 to £10,000.

Also if you were to sell your car then the Trustee could look to ingather the full proceeds from this to increase the return that your creditors receive and reduce the balance that is written off.

Obtaining further credit could be possible but this may come at a cost as your credit report will more than likely have been damaged because of the Trust Deed. Iíve seen clients obtain finance on vehicles and the total amount of interest that they will repay is more than the actual value of the vehicle. Having a parent help out with finance or as a guarantor could help but you need to pay attention to the level of interest you will pay back.

If your thinking about doing anything give your Trustee a quick call to run it past them and keep them in the loop. That way everything is done right and there are no problems later on down the line.

Hope this helps.
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