Hire purchase with baloon payment

[Graham21]

Just wondering if anyone can shed some light on my situation. I got a Mercedes through Mercedes Finance on the hire purchase with baloon payment scheme. I have completed the 36 months of payment (as per the contract) but I have not chosen to make the final `balloon` payment at the end of the contract as I do not require the car anymore. The contract states that I will, at the end of my contract, have the option to purchase. I got a letter saying the contract was up and I would be required to pay the rest of the cars value to purchase it? It seems to me that I have not been given the option to say I don't want to buy it. The contratc is quite clear in stating that at the end of the hire period I will have an option but the people at Mercdes are adamant that I have to purchase it? I think that they may be trying to 'pull one' over on me. Has anyone had a similar experience.
Thanks

 

[jibcl500]

I had a 911 in the same situation they dont make it easy to recover the car at the end, I even at one point couldnt get the hire company to find me on the system!!!, they ddint have any record or the reg, my name etc etc.

Gave up in the end and sent them the final balloon payment of £14k for a car worth £22k and pistonheads.com sold for £18k after 20 mins !!!!

jib

 

[jerrytlr]

Just wondering if anyone can shed some light on my situation. I got a Mercedes through Mercedes Finance on the hire purchase with baloon payment scheme. I have completed the 36 months of payment (as per the contract) but I have not chosen to make the final `balloon` payment at the end of the contract as I do not require the car anymore. The contract states that I will, at the end of my contract, have the option to purchase. I got a letter saying the contract was up and I would be required to pay the rest of the cars value to purchase it? It seems to me that I have not been given the option to say I don't want to buy it. The contratc is quite clear in stating that at the end of the hire period I will have an option but the people at Mercdes are adamant that I have to purchase it? I think that they may be trying to 'pull one' over on me. Has anyone had a similar experience.
Thanks

I thought the option to hand the car back was only on PCP schemes, rather than the standard HP with balloon.

I very nearly fell into this trap - negotiated a great finance deal on my Lotus and it was only on the way home after negotiating the deal that I realised there was no 'hand it back' option. I was able to renegotiate another finance deal (same car, same dealer but with a different provider) that did have the hand it back option, for only a few £ more per month, so I was happy in the end.

I think you need to check the wording of your deal very carefully - unless it explicitly states that you can hand the car back with no more to pay, then your only option is to pay the final amount and keep the car.

In my opinion, the ONLY reason for taking out a PCP in the current climate is to give some protection against higher than anticipated depreciation - which only holds true if you have the hand it back option.

Hope this helps. If the hand it back clause is definitely in your documentation, there should be no issue with Merc finance....


Cheers

Jerry

 

[jberks]

I wasn't aware of any HP with balloon deals, I thought they were all hire /pay baloon or hand it back schemes.
I guess it all depends on what your documentation says.
If, as you say, "The contract states that I will, at the end of my contract, have the option to purchase." and it uses the word "option" then that strongly implies (strongly enough for a court or the ombudsman I suspect) that you also have the "option" not to purchase.

Also, if it doesn't have that option and so is really just HP - this normally has a clause, presumably put there by law as I can't see finance co's doing voluntarily, that states that after 50% of the payments, you can hand it back without penalty. All depends on the figures but if you have paid over 50% which I assume after 3 years you will have done, this may be an exit route too.

 

[Alex M Grieve]

I got a letter saying the contract was up and I would be required to pay the rest of the cars value to purchase it?

I agree with the others. The option (for which you probably paid a fee in the original agreement - worth checking in order to quote this too them - it will have afancy name and be anywhere from £50 upwards) is just what it says. I have been in this situation with another supplier whereby the "balloon payment" was more than the residual value of the car, so I gave them the car back.

At present, even the most clairvoyant providers must be taking a hammering on this as residual values are not good - much worse than might have been expected. I guess some also hiked their balloon payments in the original deal to put really good bait on the lowest possible monthly rentals?

Read your sentence which I have quoted. If you wish to purchase the car, then you must pay the rest of the cars previously agreed value. No doubt about that. That is what the sentence says.

But you don't wish to purchase it, so that does not apply. I am sure that they are desperate to achieve the sale/balloon payment and are trying to be cute in order to pressure you into it.

If it works with even a few people, it will have been worth their while.

It does not appear to be fair or in line with the contract.

If they get heavy, either the opinion of Trading Standards, or your lawyer should be sought before parting with any cash.