My car is on finance or hire purchase
The most common enquiry that we receive via our helpline or enquiry form is that ‘my car is on finance or hire purchase and has been clamped’. Although the regulations expressly provide that a bailiff may only take control of goods belonging to the debtor, this does not automatically mean that a car that is on finance on hire purchase vehicle cannot be taken into control. The deciding factor will be the type of finance agreement and the amount of equity/ beneficial interest that may remain in the vehicle if it were sold and remaining finance paid off.
The different types of finance agreements:
According to figures from the Finance & Leasing Association, around 75% of all new cars are now bought on credit. There are many different types of ‘finance’ or other ‘agreements’ and below, we address the most popular types:
A Motability vehicle belongs to Motability Finance and accordingly, cannot be seized by a bailiff. Of significance, is that a vehicle displaying a valid ‘Blue Badge’ will be considered exempt from seizure. This requirement is outlined under Regulation 4 of the Taking Control of Goods Regulations 2013.
Although enforcement companies have access to DVLA records, such a search will not reveal the existence of a ‘Log Book’ loan. It is usual for enforcement companies to will carry out an ‘HPI’ search in advance of a visit. This is to establish whether or not the vehicle is subject to finance. An HPI search should reveal the existence of a ‘Log Book’ loan. However, it will not reveal how much is outstanding under the agreement.
If the amount outstanding exceeds the value of the car, it would not be seized. If you have a Log Book loan against your vehicle, you will need to provide evidence to the enforcement company.
Since 2015, there have been a number of legal challenges brought to the courts regarding the seizure of a vehicle subject to hire purchase. Unfortunately, this continues to be a very complicated and grey area of law. Unless legislation is introduced exempting items under hire purchase, the position will not be resolved unless a case is brought to the Court of Appeal.
Generally, whilst many vehicles subject to finance are seized, the same cannot be said for vehicles subject to Hire Purchase. No two cases are alike. At the very least, all enforcement companies will want to examine the relevant hire purchase (or other) agreement. From enquiries that we receive on this subject, many people confuse ‘hire purchase’, with a Personal Contract Plan (PCP).
Personal Contract Plan (PCP):
Under a Personal Contract Plan (PCP) you can acquire a brand new car with a five year warranty at almost zero interest rate. Depending on your credit score, a nominal deposit is required. In order to own the vehicle, a final ‘bullet’ payment would need to be paid at the end of the term. In reality, most people choose not to pay the ‘final sum’. Instead they trade-in the car and acquire a brand new vehicle under a new Personal Contract Plan.
Until the final payment is made under the Personal Contract Plan, the vehicle will continue to be owned by the finance company.
Can a bailiff clamp a car that is on finance or hire purchase?
Yes he can. In fact, if the vehicle is located on a highway he has no choice but to do so. The relevant legislation is Regulation 18.2 of the Taking Control of Goods Regulations 2013. This states that if the vehicle is located on a highway, it must (not may), be immobilised.
How long can the vehicle be clamped for?
A vehicle that is immobilised cannot be removed to the vehicle pound unless a period of not less than 2 hours have elapsed. The relevant legislation is Regulation 18.5 of the Taking Control of Goods Regulations 2013. Legislation does not provide a maximum period that a vehicle can be immobilised for. If the vehicle is subject to finance, it is fairly common for it to be immobilised for a period of up to 2-3 days. This period of time is to give the enforcement agent the opportunity of making enquiries with the finance company. Unfortunately, we have received many reports of finance companies instructing the enforcement agent to remove the vehicle to their pound. This is usually because of arrears under the agreement.
What will the finance company do if the vehicle is clamped?
It is not usual for the finance companies to intervene. This is because, almost all finance agreements contain a clause warning that if a fine or penalty is not paid and the vehicle is subsequently seized, that this will lead to the agreement defaulting. In order to protect their vehicle, some companies issue a Default Notice.
Commentary from Bailiff Advice Online:
If your vehicle has been clamped or removed or your vehicle is subject to finance or hire purchase, you can email a question to us using our popular Question page. Alternatively, we can be contacted by phone. Details are on our Contact page