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Defaulting on Car Loan and returning to the UK - implications

Defaulting on Car Loan and returning to the UK - implications

Old Sep 10th 2018, 1:38 pm
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Default Defaulting on Car Loan and returning to the UK - implications

Hi,

My daughter and her partner have been Australia now for just over 2 years and in April of this year they decided to buy a new car, despite me telling them not to. They went in to the local dealership to buy a used vehicle for around $20k AUD and ended up coming out with a brand new car costing $64k including taxes etc.!! Now fast forward 5 months it transpires that he will end up losing his job, due to health reasons - physically won't be able to do the job, which he has trained for 5 years, due to the strain it puts on his back. So the only option is to move back to the uk and continue here - less stress on the back, due to the type of work - just trust me when i say this.

The problem is that they will be 9 months into a 48 month agreement and the exit penalties are very harsh, to say the least. Finance in Australia can be front loaded, as is this one, unlike in the UK where it is balanced payments with interest calculated daily. So despite paying over $1k per month they haven't even started paying the capital off. The cost to return the car is just plain astronomical, and they fundamentally cannot afford it! They are going to contact an independent Financial Councillor that will hopefully assist. They do want to do the right thing and reach a fair and equitable agreement, but I have a feeling the finance company (who is owned by the manufacturer) is just going to say tough, that's what you signed to and therefore that's what you owe.

They are also trying to sell it privately, or get someone else to take on the lease - not having much luck with either unfortunately.

Worst case scenario, in the event they can't reach a mutually agreeable solution with the finance company, and they are left with no option - to just leave the car on the dealers forecourt and come back to the UK.

What do you think are the likely implications, given the following:

Global finance company - i.e. they sell these cars all over the world, including the UK.
Agreement is in my daughters partner name only - he is Australian by birth, but has dual nationality as he has lived in the UK for most of his life. They are not married, but plan to in the next few years - so she sees it as her problem too.
The manufacturer will have the car, so they haven't stolen it or sold it and made off with the proceeds.
Car is in immaculate condition.
Essentially they, the finance company, just won't have made as much money as they expected - almost certainly a moot point as they have broken an agreement (which quite franckly is horrendous) which they signed to.

Their intention was to stay in Australia - so much so, my daughter is applying for a permanent visa, so this was not premeditated and they had every intention of paying the loan in accordance with the t&cs they signed up to, no matter how ridiculous they are IMO. They haven't been living to excess and borrowed money to fund a lifestyle they couldn't afford, it is just a set of unfortunate circumstances they have found themselves in, that could have huge cost implications on them both.

I am sure some of you will say - Tough, that is the contract you signed, and put it down to a life lesson... that's not what I am asking for.

I would like to know what the likely implications are, given someone's experience or that you know something similar happened to another person, in the event the leave the car with the dealer and fly back to the UK, never to return to Australia.

Thank you in advance for all thoughts advice etc..

Mark
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Old Sep 10th 2018, 9:27 pm
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Default Re: Defaulting on Car Loan and returning to the UK - implications

Originally Posted by Kram77 View Post
The manufacturer will have the car, so they haven't stolen it or sold it and made off with the proceeds.
I would imagine the dealership will simply report an abandoned car and it will be towed away and impounded. Not a lot the dealer or manufacturer can do with a vehicle registered to someone else.

It would probably make more sense to default on the loan now and have the car repossessed.
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Old Sep 10th 2018, 10:12 pm
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Default Re: Defaulting on Car Loan and returning to the UK - implications

This is something that loan companies have happen on a daily basis, and they will certainly be insured against it. People cant repay the loans for a variety of reasons, and so the loan companies cover themselves against the risk. The best way forward would be to get a solicitor to negotiate with the loan company and agree to return the car. The worst thing they can do is walk away and hope for the best.
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Old Sep 11th 2018, 11:13 am
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Default Re: Defaulting on Car Loan and returning to the UK - implications

Thank you for the replies!

Originally Posted by bcworld View Post
I would imagine the dealership will simply report an abandoned car and it will be towed away and impounded. Not a lot the dealer or manufacturer can do with a vehicle registered to someone else.
But by abandoning the car on the dealers forecourt, surely you are defaulting on the loan, and therefore the finance company will repossess in accordance with the contract? Therefore the finance company will own the asset, which they can sell on.. or am I missing something.?


Originally Posted by spuddyo View Post
This is something that loan companies have happen on a daily basis, and they will certainly be insured against it. People cant repay the loans for a variety of reasons, and so the loan companies cover themselves against the risk. The best way forward would be to get a solicitor to negotiate with the loan company and agree to return the car. The worst thing they can do is walk away and hope for the best.
They have sent the finance documents to the financial councillor who is going to advise accordingly. Also, they have a friend who is a Solicitor who said he would assist as a favour, so thanks for the suggestion.
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Old Sep 11th 2018, 10:15 pm
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Default Re: Defaulting on Car Loan and returning to the UK - implications

If someone just abandons the car they would be defaulting on the loan without prior agreement and may end up with a bad credit record and not be able to get a loan or mortgage moving forward. If it's all agreed before hand, there is a good chance that their credit history remains intact and they can look forward to the chance of finance in the future.
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Old Sep 12th 2018, 4:57 pm
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Default Re: Defaulting on Car Loan and returning to the UK - implications

Originally Posted by spuddyo View Post
If someone just abandons the car they would be defaulting on the loan without prior agreement and may end up with a bad credit record and not be able to get a loan or mortgage moving forward. If it's all agreed before hand, there is a good chance that their credit history remains intact and they can look forward to the chance of finance in the future.
I am not sure your credit record follows you to another country... although I could be wrong.

The real issue is if the finance company puts it in the hands of a debt collector in the UK - then he/they will have problems.

Either way, we are hoping to reach a compromise that works for both parties...!

Last edited by Kram77; Sep 12th 2018 at 6:34 pm.
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Old Sep 12th 2018, 5:33 pm
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Default Re: Defaulting on Car Loan and returning to the UK - implications

I'm confused. Did they buy the car and got a loan to pay for it or did they lease it for 4 years? You use both terms in your original post.
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Old Sep 12th 2018, 6:00 pm
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Default Re: Defaulting on Car Loan and returning to the UK - implications

Originally Posted by Rete View Post
I'm confused. Did they buy the car and got a loan to pay for it or did they lease it for 4 years? You use both terms in your original post.
For $64k they'll have bought it, on finance.
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Old Sep 12th 2018, 6:33 pm
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Default Re: Defaulting on Car Loan and returning to the UK - implications

Originally Posted by Rete View Post
I'm confused. Did they buy the car and got a loan to pay for it or did they lease it for 4 years? You use both terms in your original post.
You are right, mixing terminology. It is a Personal Contract Purchase - monthly payment with the option to purchase at the end by paying off the balloon amount.

Originally Posted by Pollyana View Post
For $64k they'll have bought it, on finance.
Correct
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Old Sep 16th 2018, 10:56 am
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Default Re: Defaulting on Car Loan and returning to the UK - implications

30 odd years ago you might get away with it.
With the advent of the pc the globe just got a hell of a lot smaller.
Centrelink know if you receive a uk pension or not, they also know if you come and go from Australia.
I know this has nothing to do with Centrelink, but if they have access to this info then it's likely global finance companies have too.
It won't take them long to find you.

Best advice is to put your cards on the table with the finance company and make a deal.
It may be an expensive deal but it's better than worrying if the debt is getting bigger.
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Old Sep 16th 2018, 11:21 am
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Default Re: Defaulting on Car Loan and returning to the UK - implications

Originally Posted by robowen View Post
30 odd years ago you might get away with it.
With the advent of the pc the globe just got a hell of a lot smaller.
Centrelink know if you receive a uk pension or not, they also know if you come and go from Australia.
I know this has nothing to do with Centrelink, but if they have access to this info then it's likely global finance companies have too.
It won't take them long to find you.

Best advice is to put your cards on the table with the finance company and make a deal.
It may be an expensive deal but it's better than worrying if the debt is getting bigger.
Completely agree - I want them to do the right thing. Also, they really don't want to be looking over their shoulder for the next 6 years.

However, from what I have read, people abandon cars all the time! Take Dubai as an example - thousands of cars. It would become an administrative nightmare, and very costly to maintain teams of people to chase the debts. Surely they would just have insurance or self-insure against most cases? It's hard enough to get money out of people who owe you in the same country, never mind the other side of the planet.

Last edited by Kram77; Sep 16th 2018 at 11:56 am.
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Old Sep 16th 2018, 9:16 pm
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Default Re: Defaulting on Car Loan and returning to the UK - implications

Originally Posted by Kram77 View Post
However, from what I have read, people abandon cars all the time! Take Dubai as an example - thousands of cars. It would become an administrative nightmare, and very costly to maintain teams of people to chase the debts. Surely they would just have insurance or self-insure against most cases? It's hard enough to get money out of people who owe you in the same country, never mind the other side of the planet.
Are you just looking for someone to say, "no, it's ok, tell 'em to abandon and not worry about it"?
If so, it's generally best to say that at the start of the thread to save people from wasting their time.
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Old Sep 17th 2018, 7:47 am
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Default Re: Defaulting on Car Loan and returning to the UK - implications

Originally Posted by Dreamy View Post
Are you just looking for someone to say, "no, it's ok, tell 'em to abandon and not worry about it"?
If so, it's generally best to say that at the start of the thread to save people from wasting their time.
Not at all, I have made it very clear that I want to make sure they do the right thing. However, being that they are fully grown independent adults, albeit young and prone to silly mistakes, who live on the other side of the planet and may actually default on the loan, despite my advice and guidance, as they cannot see any other way out - I am trying to find out what the implications are, being a concerned parent, should they end up doing it - or is that too difficult to grasp?

Either way, thank you for invaluable input!

Last edited by Kram77; Sep 17th 2018 at 8:50 am.
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Old Sep 17th 2018, 9:30 am
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Default Re: Defaulting on Car Loan and returning to the UK - implications

Your daughter and her partner are adults enough to live on their own and qualified for $64k credit. Surely they can figure out how to fix it. If you want them to do the right thing then surely suggesting she gets a (better?) job and them staying to pay their debt would be the way to go?
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Old Sep 17th 2018, 10:49 am
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Default Re: Defaulting on Car Loan and returning to the UK - implications

Originally Posted by Dorothy View Post
Your daughter and her partner are adults enough to live on their own and qualified for $64k credit. Surely they can figure out how to fix it. If you want them to do the right thing then surely suggesting she gets a (better?) job and them staying to pay their debt would be the way to go?
Have you read the original post...?
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