GRACE ON THE CASE: VW Financial Services told me I’d paid off my late husband’s car but then demanded an extra £13,000 – is this fair treatment?
- A widow has been battling with Volkswagen Financial Services
- The firm initially said she had paid off her late husbands finance plan
- It then told her it would need an additional £13k before she owned it
- We reveal what happens to car finances when you die
- Do you have a consumer problem? Contact: [email protected]
My husband bought a new Skoda Octavia in September 2019 but sadly passed away unexpectedly early last year.
Following his death, I kept trying to speak to someone at Volkswagen Financial Services about the car loan agreement but either couldn’t get through due to the lines being busy or was told I wasn’t a priority as I could meet the monthly payments.
After eventually getting through, I was told to pay £7,743.32 as the full and final settlement figure which meant I would then have ownership of the car. I did this and believed it to be the end of the matter…
After a death, there are many financial responsibilities to take care of, adding to the stress
However, a few weeks later, I was told that was actually a voluntary termination figure and I still owed them a further £13,416.67 to clear the finance.
This has been a nightmare and caused me much stress and anxiety. What can I do? E.S, via email
Grace Gausden, consumer expert at This is Money, replies: Firstly, I am deeply sorry to hear of your loss.
In the fog that happens after such a traumatic event, going through the finances can be one of the most daunting tasks and companies should make it as easy, and as painless as possible.
One of the companies that you had to deal with was VWFS – your husband had financed a Skoda (a company owned by Volkswagen) and you needed to sort ownership of your late husband’s car before you could begin probate.
You believed the £7,743.32 payment was what was needed to own the car and put the matter to bed, and move on. But after this was done, you were soon driven up the wall by VWFS.
You then faced an uphill battle after it asked for an additional £13,500, claiming if you did not pay, the car would be taken away.
Your husband, Anthony, had bought the brand new Skoda in September 2019 on a four-year personal contract purchase contract.
These are essentially loan agreements, where drivers pay a monthly balance on a car. Consumers won’t pay off the whole price of the vehicle and can return it at the end, unless they choose to pay a final balloon payment.
Following his death, you attempted to speak to someone at VWFS about the car loan agreement but say you could not get through due to the lines being busy.
When you finally did, you were unceremoniously told you were not a priority as you could currently meet the £400 monthly payments – already, it appears, the customer service was severely lacking.
GRACE ON THE CASE
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However, sorting out the car arrangement was incredibly important as without doing so, you were unable to complete probate.
Probate is when someone applies for the legal right to deal with someone’s property, money and possessions after their death.
Without sorting probate, this also meant you could not sell your house, which was left as a shared asset in the will, and were left having to pay £1,204 a month on the mortgage.
In June, you received a letter from VWFS saying you would have to deal with Phillips and Cohen, a dedicated deceased account management business, directly as it looks after the bereavement aspect of their business.
You spoke to Phillips and Cohen on 3 July and it provided you with a price to settle the outstanding finance which you paid on the same day at a total of £7,743.32.
In the letters sent by the firm, this was described as a full and final settlement, where consumers can pay a lump sum of the money owed. I have seen copies of these letters.
At this point, you believed all was sorted and you had paid off any remaining debt, leaving you to keep the vehicle.
This was confirmed by a letter you received just days later saying you had made full settlement on the account, the case had been closed, returned to Skoda and you now owned the car outright.
Emma’s late husband, Anthony, bought a Skoda Octavia vRS car (similar to the one pictured) on a finance agreement through VWFS
You were also informed that a finance marker on your name would be removed within 48 hours.
I can only imagine the relief you felt at this point, thinking the long standing issue had been resolved.
However, you noticed in the following weeks the finance marker had not been removed so you made numerous complaints to Phillips and Cohen which said it would pass on to VWFS.
Following this complaint, you were called by Skoda and were shocked to be told you did not, in fact, own the car and the payment of £7,743.32 made was a voluntary termination figure.
You have told me this situation caused you ‘major stress and anxiety’ all whilst you are having to deal with the death of your husband.
What is voluntary termination?
Voluntary termination of a PCP is the legal right of a borrower to cancel their finance agreement early which is usually only possible after paying over half of the agreed amount.
At this point, the borrower will be given a figure, which they must pay in order to get out of the contract.
You may also need to pay admin fees, for an excess mileage you used and for any damages that occurred.
The agent said you still owed them a further £13,416.67 to clear the finance – this would then complete the full and final settlement. It claimed this mistake was due to an internal error.
Despite repeat requests, you were not informed how this happened, why it took eight weeks to notice and another four weeks to tell you.
You explained to VWFS you do not have access to your late husband’s accounts or emails so cannot access the contracts and has no means of knowing what has been paid in deposit, monthly payments or what was agreed in the contract.
However, the firm said it was taking steps to recover the vehicle and stated it would only negotiate with your solicitor, costing you £280 plus VAT per hour.
This is despite letters sent by Phillips and Cohen clearly stating that the £7,743.32 was the full and final settlement needed to be made to own the car.
At this point, it appeared that VWFS was piling on the misery, and at no time, appeared to act in the interests of you or your late husband.
You said: ‘I have explained in numerous emails about all the stress this is causing me but Skoda has never acknowledged or addressed this other than a one off offer of flowers or a hamper.’
‘This issue and my poor treatment at the hands of Skoda has caused me so much anxiety and sleepness nights.’
To add insult to injury, your late husband worked as a contractor for VWFS for four years in the past. No doubt, as you say, he would be appalled by its actions.
Emma was unable to complete probate as VWFS did not sort out the car finance agreement
Graham Hill, a car finance expert, who has over 35 years experience, reviewed your case and believes it is quite clear an enormous error had been made.
He said: ‘The figure that is the Voluntary Termination figure that would require the car to be handed back to VWFS has been mistakenly passed on as full and final settlement.
‘It was VWFS who decided to pass over the handling of the settlement request to Phillips and Cohen who were therefore acting on behalf of VWFS.
‘The letter to you is quite clear, the payment of £7,743.32 is the full and final settlement.
‘Clearly, there has been a breakdown in communications between VWFS and Phillips-Cohen but that is irrelevant. A figure was given as full and final settlement, it was paid and the car is now owned by the estate. In my opinion there is no argument.’
VWFS apologises and agrees you can keep the car…
I contacted VWFS, asking it to review the case as a matter of urgency, after hearing about the mess it had so far left you in.
Fortunately, after looking at your case and agreed that you can keep the car, without having to pay the additional £13,416.67, vetoing the amount completely.
The total ‘outstanding finance’ was wiped altogether, leaving you free to keep the car and move forward with your life, without having to pay out thousands and thousands of pounds to a company that has caused you so much distress.
It took nearly a year for the matter to be resolved, adding much unnecessary stress and anxiety to you throughout the most difficult time of your life.
A spokesperson for Volkswagen Financial Services said: ‘Following our previous comment, our specialist team has now reviewed the case and we are able to support a solution that enables the customer to remain in her vehicle.
‘We sincerely apologise for any stress or inconvenience we may have added at this difficult time.’
Had VWFS not changed its mind about the outcome, you could have made a complaint to the Financial Ombudsman Service, a free service where the case will be reviewed by an arbitrator.
If the Ombudsman makes a decision, neither the customer or firm are bound by the decision but if both parties agree, the decision is binding.
You could also seek advice from your insurer if it has legal cover included in your contents insurance as well as speak to Citizen’s Advice.
I am thankful we were able to help in some small way and wish you all the best.
Cars on finance agreements will still have to be paid for in the event of a person passing away
What should happen to car finance after a death?
Car finance debt does not disappear after a death. Depending on the type of agreement will depend on who is then responsible for paying it off.
If there is a guarantor, they will become responsible for the finance agreement, and if there is a joint agreement, the other person is responsible for paying off the debt.
If not, the debt will become part of someones overall estate after their death. If the deceased has a will, their executor is responsible for managing your financial affairs, including car finance debt.
However, if there is no will, an administrator will be appointed, which is usually a next of kin.
If the car is on a secured loan, like a personal contract purchase or hire purchase and the executor of the estate is able to settle the outstanding debt, the car can be kept if there is enough money to cover the settlement figure in the estate.
However, if not, as is often the case, the finance company can take the car and sell it at a trade auction. Whatever it earns at auction is taken off your debt.
Alternatively, there is the option for the executor to complete a voluntary termination of your finance agreement.
This requires you to have repaid more than 50 per cent of the total amount payable, which you may have already done. If not, the executor can pay whatever is needed to bring the total paid up to the 50 per cent point.
The car is collected by the finance company but there can be penalty fees for cancelling early.
How does this compare to a mortgage?
There are, sadly, likely to be many other people who have to go through the same situation, dealing with a late family members finances.
This is because, when somebody dies, any existing debts are still outstanding, including mortgages – usually the biggest outgoing.
Generally, this must be paid by the executor of the estate before any savings are passed on to the family or other named beneficiaries named in the will, according to L and C, the mortgage advisors.
If the outstanding balance is too large to be paid off with other assets from the estate, then the biggest asset, usually the home, may need to be sold.
Family members should notify their loved one’s mortgage lender about their death as soon as possible, especially if they think they are likely to have difficulty meeting the monthly payments.
Lenders are legally allowed to demand the full sum of the mortgage be repaid and hold the right to ‘force’ the sale of a property to reclaim any outstanding balance, although in most cases lenders will be sympathetic and understand that the legal process can take time to sort.
If you want to keep the property in your name, then you will need to run through a standard mortgage assessment to confirm you can afford to take over the mortgage payments in your own right.
If the lender will not approve what is effectively your new mortgage application, then you may need to sell the property if no other insurance or savings are available to repay the debt.
However, every situation is different and it is important to seek legal advice to see what are the necessary steps going forward.
One reader could not receive calls on his phone from the EE network after moving to Vodafone
Hit and miss: This week’s naughty and nice list
Each week, I look at some of the companies that have fallen short of expected standards as well as those that have gone that extra mile for customers.
Miss: This week, reader Mark told me of his ongoing phone troubles – a problem that had lasted for two years.
He moved his number from EE to Vodafone years ago and ever since found that nobody on EE’s network can call him.
Those who try are told the number does not exist. Every other network can connect fine.
When he complained to Vodafone, he was told it is EE’s problem but when he speaks to EE, he said it denies there is a problem. This has caused him trouble as he uses his phone for both work and personal reasons.
I contacted Vodafone to understand what the problem was. Fortunately, it quickly managed to resolve the issue.
A Vodafone UK spokesperson said: ‘We have looked into Mark’s situation and can see that his previous account with EE was left active on their system which resulted in him being unable to receive calls from their network.’
‘We have now worked together with EE to resolve the issue and have been in touch with the customer to apologise and offer him a £50 gesture of goodwill.’
I’m glad to have been of some assistance in this rather frustrating circumstance.
Hit: In good news this week, one reader, Clare wanted to let me know about a positive experience she had from tea firm, Birchall.
She ordered some tea as a Christmas present from their website.
She said: ‘A couple of days later she I missed a phone call from them and was left an answer phone message saying there had been a mix up with my order.
‘It appeared they had accidentally sent my order to a different customer, and warned me that I may receive that customer’s order instead.
‘They assured me they had immediately sent me out a replacement for my original order by special delivery.
‘I got home that evening to find I had indeed received the wrong order but when I emailed to ask if they would like it returned they very quickly sent a reply to say no, I could also keep and enjoy the large order of tea sent to me in error.
‘The next day my own order turned up. I ended up with quite a lot of tea but I shared this with my family and friends.
‘I was impressed with Birchall’s swift and friendly customer service and speed of putting things right.’ Enjoy your tea party.