Does a Drink Driving Ban Affect Car Finance?
A drink driving conviction and the resulting driving ban can have practical implications for your car finance agreement. While a conviction does not automatically terminate your finance, it creates complications that need to be understood and managed.
Most car finance agreements, whether hire purchase, PCP or lease agreements, require you to maintain the vehicle and keep it insured. If you are banned from driving and cannot insure the vehicle, you may be in breach of the finance terms.
The financial impact extends beyond the agreement itself. You are still liable for monthly payments during your ban, even though you cannot use the vehicle. Failing to keep up payments can result in the vehicle being repossessed and damage to your credit score.
Your Obligations Under Different Finance Types
Hire Purchase and PCP
Under hire purchase and PCP agreements, the finance company owns the vehicle until all payments are made. You are required to maintain insurance on the vehicle throughout the agreement. During a driving ban, you must arrange storage insurance or SORN the vehicle.
You must continue making monthly payments. The finance company is not obligated to pause payments because of your driving ban. If you fall behind on payments, the vehicle can be repossessed. Contact your finance provider to discuss options if you are struggling to pay.
Personal Contract Hire (Lease)
Lease agreements are typically less flexible. You are contracted to make payments for the full lease term. The vehicle must remain insured and maintained to the standards required by the lease agreement.
Some lease companies may allow early termination, but this usually involves significant early settlement fees. The cost of terminating a lease early can be substantial, particularly if you are in the early months of the agreement.
Personal Loan for a Vehicle
If you purchased your vehicle with a personal loan, the vehicle is yours and the loan terms are unaffected by a driving ban. You must continue repaying the loan regardless of whether you can drive the vehicle.
You have more flexibility with a personal loan because you own the vehicle outright. You can choose to sell the vehicle to reduce costs during your ban, though you must use the proceeds to repay the outstanding loan balance if applicable.
Managing Your Vehicle During a Ban
During a driving ban, you have several options for your vehicle. You can keep the vehicle insured with a named driver so that someone else can use it. This is often the most practical solution if you have a partner or family member who can drive.
Alternatively, you can SORN the vehicle and keep it off the road. This removes the requirement to insure it but means it cannot be driven on public roads. You must still make any finance payments.
Selling the vehicle is an option if you own it outright or can settle the finance. If the vehicle is on finance, you will need the finance company's permission to sell and must use the sale proceeds to clear the outstanding balance.