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The Money Doctor: I can't afford my car

Q MY CAR was bought under a hirepurchase agreement. I now realise I cannot afford it after 15 months of a 36-month agreement.

My payments are up to date. What can I do and will it affect my credit rating?

Dave, Inchicore

A IF YOU cannot afford the repayments you can end a HP agreement at any time. However, you must give notice in writing and return the car, paying half the HP price, less the total of your payments to date (including any deposit). You also need to pay the cost of any repairs needed.

So in your case, you have to find three months of additional payments before the car can be returned under this system.

With repairs, you could get a mechanic to check the car and pay for any necessary repairs before you return the car.

You should contact your lender and tell them that you want to end the HP agreement under the ‘half rule'. Once you have paid half the HP price, they must accept this decision. Do not sign a voluntary surrender form when you return the car or you will have to repay the balance on the HP agreement as you give up your right to end the agreement under the half-rule.

So if you end a HP agreement early, give back the car and pay back what you owe, your credit record with the Irish Credit Bureau will not be affected. The agreement will be shown as completed.

BEST RATES FOR NEST EGG

Q I HAVE more than €150,000 in my pension fund, and have decided to go the annuity route, now that I have reached 65 and am retiring. Do insurance companies vary much in their annuity rates?

Noel, Dun Laoghaire

A ON RETIREMENT, most pensions are invested in annuities — in simple terms, this is a fixed-rate deposit account where the rate is fixed until you die. The pension fund then passes on to the insurance company. So the benefit lies in outliving the expected term of the fund.

Annuities are produced by insurance companies and their annuity rates can vary between companies so shop around for the best deals.

Your age and the amount to be invested will determine best rates but generally they are much higher than those interest rates available for ordinary deposit accounts.

An authorised advisor can also advise as they must give “best advice” irrespective of who they represent. They can also advise on whether you are eligible to invest in an approved retirement fund where you have more control over the investment. Advice here is crucial.

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