My car is on finance/hire purchase
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 vehicle that is subject to finance/hire purchase 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 (details below).
The different types of finance agreements:
Figures from the Finance & Leasing Association show that 75% of all new cars are now bought on credit (up from 60% in 2011). There are many different types of ‘finance’ or other ‘agreements’ and below, we address the most popular types:
Vehicles that are subject to Motability are not owned by the individual and instead, belong to Motability Finance. A further most important point to take into consideration is that under the new Taking Control of Goods Regulations 2013 it specifically provided that a vehicle is considered ‘exempt’ from being taken into control if it displays a valid ‘Blue Badge’. Taking both these points into consideration, it is clear that vehicles provided by Motability must not be taken by a bailiff.
It is important to note here that all enforcement companies have access to DVLA records which will provide them with an almost instant response to enquiries regarding the ‘keeper’ of a vehicle. In addition, all companies will also carry out an ‘HPI’ search to establish whether a vehicle is subject to finance. However, such a search will rarely show how much is remaining under the ‘log-book’ loan.
In the majority of cases that we come across, the vehicle is considered ‘exempt’ given that the amount still outstanding exceeds the value of the car. Problems arise in cases where the ‘log book’ loan is almost at an end before ownership of the vehicle reverts back to the debtor.
Since 2015, there have been three separate court decisions that have ruled that vehicles subject to hire purchase can be seized by a bailiff. In each cases, the Judge ruled that the deciding factor would be whether it could be demonstrated that there would be any ‘beneficial interest’ (i.e. equity) if the vehicle were sold and the finance companies debt settled.
Although the above decisions were County Court ones, it is nonetheless the case that most enforcement companies will attempt to rely upon these judgments as justification for seizing a vehicle that is subject to hire purchase. This is a complicated area of law and until such time as a higher court rules otherwise, vehicles subject to hire purchase cannot be considered exempt from being taken into control by a bailiff.
The good news, is that from the many enquiries that we receive on this subject, it is found that the vehicle is not in fact subject to ‘hire purchase’, but instead subject to a Personal Contract Plan (PCP).
Personal Contract Plan (PCP):
A Personal Contract Plan (PCP) allows a person to ‘buy’ a brand new car with a five year warranty at almost zero interest rate, with just a nominal deposit being 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’ and instead, trade in the car and take out a new Personal Contract Plan and acquire another brand new vehicle. In effect, the individual is having the use of a car for 2-3 years and giving it back at the end of term.
What is clear is that a vehicle purchased under a Personal Contract Plan(PCP) will always remain the ownership of the finance company until…and unless…the final ‘bullet’ payment is made. Accordingly, a vehicle acquired under a Personal Contract Plan (PCP) cannot…and must not be ‘taken into control’.
The enforcement company will not have a ‘crystal ball’ and whilst they may be aware that the vehicle could be subject to finance, it it unlikely for them to know the ‘type’ of finance agreement.
Note 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.
A simple overview of the new Taking Control of Goods Regulations 2013 including details of the bailiff fees that can be charged, the notices that must be given by the bailiff and items that are ‘exempt’ from being taken into control (by bailiffs) can be read here.