Greater Care Required As No Two Finance Agreements Are The Same
Sunday, 12. December 2010
During many of my discussions and presentations it is often clear that those using vehicle finance or personal loans think that there is some sort of master format that means they don’t have to bother reading it. Those that may understand that this isn’t the case may ask which terms are important, the ones they need to read? Whether it is only necessary to understand the terms in a lease as opposed to a personal loan. The fact is that EVERY term in a contract is important and should be read and understood because every term is legally binding. Sadly many people rather stupidly decide upon a funder based simply on rate but obviously not everyone does this, or there would only ever be one company providing loans or HP. Some people pay a higher rate because they have considered all the terms of the contract as well as the provider. Some early settlement charges and fees can be extortionate but they are not often considered because the borrower has no intention of settling his agreement early. But over the years I’ve seen people that have received a ban and can no longer use the car, or injuries following an accident forcing them out of a car for good or into an automatic.
Redundancy, divorce and even moving abroad have given rise to an early termination and possibly huge costs, especially if the agreement isn’t regulated under the Consumer Credit Act. Other factors such as fixed rate or variable rate, arrangement fees and in the case of HP the option to purchase fee, all of these have a bearing on the potential cost of one agreement over another. And when it comes to leasing it can be an absolute minefield of fees and charges so my advice is don’t be stupid, make sure that you check everything before you sign the agreement and never ever select finance based on the headline cost, the funders are not daft, that’s how they capture the vulnerable. Have you had a bad experience? If so please let me know. By Graham Hill
