Behind on Black Horse car finance? Read this before they repossess

If a default notice or arrears letter from Black Horse Finance has just landed, this is a different situation from an unsecured credit-card or catalogue debt. Black Horse car finance is secured against the car — fall behind and the lender can ultimately take the vehicle. The good news is that the Consumer Credit Act gives you specific protections, including the option to voluntarily terminate the agreement once half the total has been paid, and the requirement that Black Horse get a court order to repossess if you’ve paid more than a third.

This guide covers who Black Horse are, how PCP and HP arrears actually work, and the realistic options — including how an IVA can cover any unsecured shortfall after the car has gone back.

Who Black Horse Finance are

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Black Horse Limited is part of Lloyds Banking Group, the UK’s largest retail bank. Black Horse is Lloyds’ specialist motor-finance arm, providing Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements through dealerships and car supermarkets across the UK. They are regulated by the Financial Conduct Authority and operate within the FCA’s CONC framework, plus the additional protections of the Consumer Credit Act 1974 for regulated motor finance.

Unlike a credit-card or personal loan, PCP and HP agreements are secured against the vehicle. You don’t actually own the car until the final payment (or option-to-purchase fee, on a PCP) — until then the car belongs to Black Horse, and they can take it back if you default.

What Black Horse can and cannot legally do

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Black Horse can:

• Issue a default notice under section 87 of the Consumer Credit Act once you fall behind, giving you at least 14 days to remedy the arrears
• Terminate the agreement if the arrears are not cleared
• Recover the car — with a court order if more than 1/3 of the total payable has been paid (under section 90 CCA — “protected goods”), or without one if less than 1/3 is paid
• After sale of the car, pursue any shortfall between sale price and outstanding balance as an unsecured debt
• Pass the shortfall to an in-house collections team or sell it on to a debt purchaser

What Black Horse cannot do:

• Force entry to your home — they can take a car from a public driveway or roadside, but they cannot break in.
• Take the car if it’s in a locked garage without your permission, even if you’ve paid less than a third.
• Threaten arrest — debt is civil.
• Add charges that aren’t in the original agreement.

Two checks worth running first

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1. How much have you paid? Look at the total amount payable on your agreement (the figure that includes interest and the option-to-purchase fee on a PCP). Work out what percentage you’ve paid. Below 1/3, Black Horse can repossess without a court order. At 1/3 or more, they need a court order. At 1/2 or more, you can use voluntary termination under section 99 CCA to cap your liability.
2. Was the agreement properly arranged? The FCA banned discretionary commission arrangements on motor finance in 2021 and is reviewing past cases. If your PCP was arranged by a dealer who set your interest rate, you may have a mis-selling complaint that can be set off against the balance.

Voluntary termination vs voluntary surrender

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These are very different — confusing them is one of the most common (and expensive) mistakes:

• Voluntary termination (section 99 CCA) — once you have paid (or are willing to pay up to) half the total amount payable, you can hand the car back and walk away. The agreement ends. Any further loss is Black Horse’s, not yours (subject to fair-wear-and-tear charges).
• Voluntary surrender — you hand the car back, but the agreement continues. Black Horse sells the car, calculates the shortfall, and pursues you for the difference plus charges. You remain fully liable for the balance.

If you can use voluntary termination, do so in writing, citing section 99 of the Consumer Credit Act 1974. Don’t say “I want to surrender the car” — that’s the wrong door.

Routes out

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• Catch up the arrears if you can — Black Horse must consider an affordable plan under CONC.
• Voluntary termination under section 99 CCA if you’ve paid (or are willing to pay up to) half. Your liability is capped.
• Voluntary surrender if voluntary termination isn’t available — but expect a shortfall to follow.
• IVA to cover the unsecured shortfall after the car has gone back, alongside any other unsecured debts. Eligibility starts at around £5,000 of total unsecured debt.
• Mis-selling complaint if the PCP was set up under a discretionary commission arrangement.
• Bankruptcy for severe situations with no realistic monthly contribution — but be aware the car can be claimed by the trustee if you’ve been keeping it and there’s equity.

Pitfalls when dealing with Black Horse

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• Don’t surrender the car when you could terminate. Voluntary surrender leaves you liable for a much bigger shortfall.
• Don’t ignore the default notice. It is the legal precursor to repossession — once expired, Black Horse can act.
• Don’t hide the car. Concealment doesn’t change the underlying debt and can be used as evidence in court.
• Don’t continue paying if you’ve already exceeded half and want out. Beyond half, you’ve already qualified for voluntary termination.
• Don’t assume the IVA can include the secured car-finance balance. It can’t — only the unsecured shortfall after the car has gone back.

Frequently asked questions

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Can Black Horse repossess my car? Yes — with a court order if you’ve paid more than a third of the total payable, without one if you’ve paid less.

What’s voluntary termination? Section 99 of the Consumer Credit Act lets you hand the car back once you’ve paid (or pay up to) half the total payable, with no further liability beyond fair-wear charges.

Will an IVA include my Black Horse debt? An IVA covers the unsecured shortfall after the car has been returned — not the secured balance while you still have the car.

Can I keep the car in an IVA? Generally no — car finance is secured. You usually need a cheaper alternative car for an IVA proposal.

Related guides

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• Lowell Financial — major debt purchaser
• Cabot Financial — major debt purchaser
• Can debt be written off?
• How long can I be chased for a debt?
• How do I apply for an IVA?