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VTs cost finance companies £1,500 per car

The growing problem of voluntary terminations, where consumers abandon HP agreements after paying only half of the borrowed finance, is costing motor finance companies an average of £1,500 for each returned car.

And, according to CAP, which is launching a VT risk management system, retailers, particularly larger groups, are actively encouraging car buyers to walk away from the deals and “dump” cars on finance providers.

Meanwhile the Finance and Leasing Association is calling on the Government to scrap the VT provision, enshrined in the 1974 Consumer Credit Act, in its submission to a Department of Trade and Industry consultation process.

An FLA spokesman says: “Whatever protection it nominally offers consumers the outdated legislation imposes a disproportionate burden on lenders who pick up the tab for growing numbers of voluntary terminations. ”

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