Car Finance - Strange offer from Lender

[Bowler]

I'm interested to hear you views on the  following.

Due to redundancy and some health issues, a friend has got into arrears with his car finance deal.  About 4 years ago, he bought a car from a mainstream car supermarket, on a PCP.  Situation today is that he's got arrears of around £12k with a balloon payment due soon of around £15k.

I don't agree with his decision to stop paying, but following (what I can only describe as) a personal and financial health check phone call with the finance company, he has received the following, by email (key information removed for privacy).

Important information about your agreement

Dear xxxxxxx,

We are writing to you about the status of your account.

After reviewing your account, we believe your arrears have worsened to a point where they cannot be resolved.

We are now proposing to close your account, with nothing further owed.

What does this mean for you?

You do not need to make any further payments.
We will write off the outstanding balance.
We will not take any action relating to the balance.
We will not attempt to recover the vehicle.
We will update your record with the Credit Reference
Agencies to show your account as Settled, with no outstanding balance. Any payments missed before closure will remain recorded as arrears on your credit file.

Do you need to do anything?

You do not need to take any action. If you would like to pay the outstanding balance, please contact us within 7 days of the date of this email.

Call us on 0123456789, Monday to Friday.

Kind regards

The message is "signed" zzzzz finance company

My friend has asked me what I think of this.  I'm certainly no expert, but I've never seen or heard of any situation where a lender will simply walk away, especially given that there is still some asset value in the car and I would have thought that such an important communication would have either been sent by post, and would also be signed by a person, rather than some impersonal general footnote

On the face of it, it looks like he's in the clear, which I'm struggling to see why.

What do you think of this?  What would you now do?

Certainly is interesting!

TIA

[trickywoo]

It’s either going to be the original provider selling the debt to a third party or getting your friend to sign a new agreement.

Could also be a straight up scam but you won’t know that until getting in touch.

Is this the first correspondence. I can’t see how they can have got £12k behind without anything being communicated earlier.

[The Rotrex Kid]

Seems very odd that they say they will write off the outstanding balance etc then say if you want to pay it, give us a call. It seems very strange.

[Jamescrs]

Seems very strange, it appears they are saying he can keep the car too and not return it at the end of the deal? All they will do is put the negatives on his credit report? Doesn't sit right somehow.

Is the car particularly low value and they don't think it's worth anything? Seems unlikely on a PCP arrangement.

[Bowler]

trickywoo said:

It s either going to be the original provider selling the debt to a third party or getting your friend to sign a new agreement.

Could also be a straight up scam but you won t know that until getting in touch.

Is this the first correspondence. I can t see how they can have got £12k behind without anything being communicated earlier.

It's not a scam. He's checked out the email address from which it came and it's valid. However, its from a "no reply" address

I don't know the history of the communications. I agree that it wouldn't be the first correspondence and there must have been something before it got to this point, but this is where he is today.

It could be that be value of the car is so low that its not worth anything (its a product if a 4x4 manufacturer, based in Solihull), but I thought that they'd at least try and get something back.

Good point about selling the debt. I'd not considered that. But surely, they'd tell him that's what they're intending doing?

[Terminator X]

Sounds ideal albeit no idea why they would write all of that off.

TX.

[Sheepshanks]

Bowler said:

“Any payments missed before closure will remain recorded as arrears on your credit file.”

In light of the rest of the email’s contents, that point seems odd?

As does them not wanting the vehicle back. At the moment, the finance company owns it - there’s no comment about what happens in that regard.

He should probably talk to Citizens Advice.

[alscar]

The email does indeed read as though he walks away with no arrears no balloon to pay and he also keeps the car ?
Sounds a right result for him !
Except it “ can’t “ be right given at the very least surely the Finance House would simply take possession of the car to recover their arrears at least.
Not saying it’s a scam if you think it’s genuine but I think CAB would be a good place to start unless he is brave enough to have this chat directly ?

[Kev_Mk3]

Strange they are writing it off - there has to be something more to it and my bet is on the health conditions.

[Jon39]

It would perhaps make sense, if the car is a Fisker EV.

[Doesitdrive]

Kev_Mk3 said:

Strange they are writing it off - there has to be something more to it and my bet is on the health conditions.

Sounds to me that the finance company have fked up, maybe by letting the debt build so high, and fallen foul of regulation.

This is there way out of it, or the regulation says they have no option.

[Sheepshanks]

Jon39 said:

It would perhaps make sense, if the car is a Fisker EV.

Just as risky - it's a JLR product.

Lots of lenders have been fined £Millions for not looking after customers in difficulty, including VWFS and some high street banks. So it could be the lender in this case is erring on the side of being over-cautious?

[Wills2]

Assuming that the email is genuine then they have discovered an issue in the way they have dealt with this loan agreement, it's not uncommon for FSCs to mess up, I had the interest I'd paid on a 3 year 911 PCP returned to me due to a clerical error on PFS side.

[asfault]

Sheepshanks said:

Jon39 said:

It would perhaps make sense, if the car is a Fisker EV.

Just as risky - it's a JLR product.

Lots of lenders have been fined £Millions for not looking after customers in difficulty, including VWFS and some high street banks. So it could be the lender in this case is erring on the side of being over-cautious?

Lender avoiding a bigger loss from potential fines.
and the original purchaser being rewarded for bad financial management (regardless of job reasons) also health reasons BUT that just sets a precedent for everyone else to play that card real or not real.

[C69]

A bizarrely generous settlement offer. 'Give back the car and we'll write off your outstanding monthly payments' would've been more than reasonable.

"Agencies to show your account as Settled, with no outstanding balance. Any payments missed before closure will remain recorded as arrears on your credit file." Are there any more monthly payments due before closure that he's going to miss? Also, I'd want to make sure that the closure date is before the due date of the final balloon payment.