Return Car or Buy it after end of Hire Purchase Agreement?

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Ciwan
Ciwan Posts: 186 Forumite
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Hi all

Someone you know about my car lease that I regret. Anyways, I've decided to keep the car, as it isn't viable for me to return it and pay all that money for returning it.

After the hire purchase agreement ends though, what is the smart thing to do?
  1. Pay the balloon payment of £4,128
  2. Return the car to them

If I do buy the car fully, couldn't I sell it on for more than £4,128 on Autotrader? It'll be 3 years old, with one previous owner (non-smoker) and full-service history from Hyundai dealer.

Am I right that option 1 is best? Am I missing something?
Only Student Loans to get rid off (Plan 1)
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  • Mercdriver
    Mercdriver Posts: 3,898 Forumite
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    **Tap Tap Tap**

    I'm afraid the Crystal Ball is playing up at the moment, what car do you have, what were down payments and monthly payments?

    Search your car on Autotrader and see what they are selling for. It won't be what you receive from a dealer, but is still a guide if you want to sell privately.
  • Ciwan
    Ciwan Posts: 186 Forumite
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    haha sorry, it is a Hyundai i10. I'm paying £169.5 a month. I also paid £1500 for first payment.

    On AutoTrader, the same model, 3 years old goes for £6,900 to £7,500
    Only Student Loans to get rid off (Plan 1)
  • Mercdriver
    Mercdriver Posts: 3,898 Forumite
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    Ciwan wrote: »
    haha sorry, it is a Hyundai i10. I'm paying £169.5 a month. I also paid £1500 for first payment.

    On AutoTrader, the same model, 3 years old goes for £6,900 to £7,500

    How long have you got until the agreement ends - i.e. when is the balloon payment due?
  • Ciwan
    Ciwan Posts: 186 Forumite
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    I got the car in January. So it'll end around Dec / 2020, or Jan 2021.
    Only Student Loans to get rid off (Plan 1)
  • Mercdriver
    Mercdriver Posts: 3,898 Forumite
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    Predictions will be hard. It depends how many facelifts/new models have been through. Especially if Hyundai do what some other manufacturers do and change model nomenclature from numbers to names.

    The Hyundai ix35 was really a Tucson, and a couple of years ago they changed it to Tucson. If they decided to call it the Hyundai Kimchi (they'd never call it that ;) ) then your i10 would lose more value.
  • neilmcl
    neilmcl Posts: 19,460 Forumite
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    Ciwan wrote: »
    Hi all

    Someone you know about my car lease that I regret. Anyways, I've decided to keep the car, as it isn't viable for me to return it and pay all that money for returning it.

    After the hire purchase agreement ends though, what is the smart thing to do?
    1. Pay the balloon payment of £4,128
    2. Return the car to them

    If I do buy the car fully, couldn't I sell it on for more than £4,128 on Autotrader? It'll be 3 years old, with one previous owner (non-smoker) and full-service history from Hyundai dealer.

    Am I right that option 1 is best? Am I missing something?
    If you already decided to keep the car why are you asking?

    Also, you didn't lease the car, you took out finance on a car.
  • Ciwan
    Ciwan Posts: 186 Forumite
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    Sorry for the confusion, Neilmcl. I have decided to keep the car for the duration of the 3 years, but after that, I have the option of returning it. I'm asking whether I should return it or keep it after the 3 years.

    You're right about the finance point :)
    Only Student Loans to get rid off (Plan 1)
  • flashg67
    flashg67 Posts: 3,997 Forumite
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    Really difficult to predict now - you'd be best to wait until say 2 1/2 years through the agreement to get a better idea of what it's worth. Even a 'we buy any car' type place will likely give you more than the minimum value of £4100 (going from my own experience, being in a similar situation but further along into my agreement)
    Worst case is you'll end up giving it back and walking away with nothing. These PCP type deals are really designed to keep you coming back for new car at the end.
    If you like the car, you could re-finance the remaining £4100
  • fiisch
    fiisch Posts: 510 Forumite
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    In my experience with PCP, the balloon payment at the end leaves very little - if any - equity.

    You can always list the car for sale while it is still under finance and see if anyone is willing to pay enough to settle the finance and leave you in profit*.

    *Of course if you do this, you will need to let the buyer know there is outstanding finance, and the etiquette is to let the buyer pay the finance company direct before paying any balance to you. This can deter some more cautious buyers.

    Surely you'll still need a car going forwards? Wouldn't it be best to budget for the balloon payment and keep the car for your own use?
  • marlot
    marlot Posts: 4,934 Forumite
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    Ciwan wrote: »
    I got the car in January. So it'll end around Dec / 2020, or Jan 2021.
    So start saving the money for the balloon payment just in case.

    You don't need to decide yet. If inflation really takes off, it might be a bargain.
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