In 2019, 2.4 million car buyers opted to get mobile using a finance agreement such as a personal contract purchase, personal contract hire or hire purchase. Doing so can be a great way to pay for your next set of wheels, but if you’re posted overseas while your contract is still running, it can cause some major issues. AFF’s money & allowances specialist, Claire Hallam, explains…

With these types of contract, the finance company owns the car, so it can refuse permission for it to be taken overseas.

I’ve been contacted by many army families who’ve had this problem. It leaves you with limited options – paying the car off before taking it, or leaving the car in the UK and continuing to pay monthly, which may not be affordable, especially if you need to finance another car overseas.

What can you do?

Firstly, engage with the finance company. It’s important to highlight that you’re an armed forces family and explain that you’re being posted overseas for service reasons rather than by choice. Check if the company is signed up to the Armed Forces Covenant and, if it’s not, tell them about it and advise how the situation disadvantages you under the Covenant.

If they still refuse, we have been able to engage with some companies who have then subsequently let the family take the car overseas, providing it’s adequately insured. However, not all cases have been successful, so it’s important to think about what you’d do if you reach a dead end.

Finally, if you’re considering buying a car in the future, ask the finance company for their policy on taking the vehicle overseas on a posting before you purchase.

Tackling the problem

The Armed Forces Covenant team is aware of the issue and is currently engaging with the Finance Leasing Association to develop a protocol for service personnel. This is likely to make it easier to take cars bought on finance to some European countries. Email me at moneyallowances@aff.org.uk for more info.

Driving lesson

If you do take your car overseas, remember that certain exemptions are in place with some insurers, which allow you to keep your no-claims bonus for up to three  years. More info and the list of insurers can be found at abi.org.uk

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