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  • FIRST POST
    • Ciwan
    • By Ciwan 14th Sep 17, 3:02 PM
    • 162Posts
    • 21Thanks
    Ciwan
    Return Car or Buy it after end of Hire Purchase Agreement?
    • #1
    • 14th Sep 17, 3:02 PM
    Return Car or Buy it after end of Hire Purchase Agreement? 14th Sep 17 at 3:02 PM
    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?
    Total Debts: £52,220.88
Page 1
    • Mercdriver
    • By Mercdriver 14th Sep 17, 3:59 PM
    • 1,369 Posts
    • 908 Thanks
    Mercdriver
    • #2
    • 14th Sep 17, 3:59 PM
    • #2
    • 14th Sep 17, 3:59 PM
    **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
    • By Ciwan 14th Sep 17, 4:00 PM
    • 162 Posts
    • 21 Thanks
    Ciwan
    • #3
    • 14th Sep 17, 4:00 PM
    • #3
    • 14th Sep 17, 4:00 PM
    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
    Total Debts: £52,220.88
    • Mercdriver
    • By Mercdriver 14th Sep 17, 4:06 PM
    • 1,369 Posts
    • 908 Thanks
    Mercdriver
    • #4
    • 14th Sep 17, 4:06 PM
    • #4
    • 14th Sep 17, 4:06 PM
    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
    Originally posted by Ciwan
    How long have you got until the agreement ends - i.e. when is the balloon payment due?
    • Ciwan
    • By Ciwan 14th Sep 17, 4:07 PM
    • 162 Posts
    • 21 Thanks
    Ciwan
    • #5
    • 14th Sep 17, 4:07 PM
    • #5
    • 14th Sep 17, 4:07 PM
    I got the car in January. So it'll end around Dec / 2020, or Jan 2021.
    Total Debts: £52,220.88
    • Mercdriver
    • By Mercdriver 14th Sep 17, 4:12 PM
    • 1,369 Posts
    • 908 Thanks
    Mercdriver
    • #6
    • 14th Sep 17, 4:12 PM
    • #6
    • 14th Sep 17, 4:12 PM
    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
    • By neilmcl 14th Sep 17, 4:17 PM
    • 10,013 Posts
    • 7,000 Thanks
    neilmcl
    • #7
    • 14th Sep 17, 4:17 PM
    • #7
    • 14th Sep 17, 4:17 PM
    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?
    Originally posted by Ciwan
    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
    • By Ciwan 14th Sep 17, 6:15 PM
    • 162 Posts
    • 21 Thanks
    Ciwan
    • #8
    • 14th Sep 17, 6:15 PM
    • #8
    • 14th Sep 17, 6:15 PM
    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
    Total Debts: £52,220.88
    • flashg67
    • By flashg67 14th Sep 17, 6:58 PM
    • 2,193 Posts
    • 1,448 Thanks
    flashg67
    • #9
    • 14th Sep 17, 6:58 PM
    • #9
    • 14th Sep 17, 6:58 PM
    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
    • By fiisch 14th Sep 17, 10:53 PM
    • 163 Posts
    • 62 Thanks
    fiisch
    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
    • By marlot 15th Sep 17, 5:42 AM
    • 3,043 Posts
    • 2,173 Thanks
    marlot
    I got the car in January. So it'll end around Dec / 2020, or Jan 2021.
    Originally posted by Ciwan
    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.
    • Ciwan
    • By Ciwan 15th Sep 17, 9:06 AM
    • 162 Posts
    • 21 Thanks
    Ciwan
    @marlot and fiisch, yep I will need a car after, but I was thinking of getting a cheaper, used one for around a £1000.

    And yes, I am starting to putting money on the side for the balloon payment at the end.

    I'll do some research on prices when I'm closer to the end date of the agreement then
    Total Debts: £52,220.88
    • onomatopoeia99
    • By onomatopoeia99 15th Sep 17, 9:13 AM
    • 3,340 Posts
    • 7,371 Thanks
    onomatopoeia99
    I'm asking whether I should return it or keep it after the 3 years.
    Originally posted by Ciwan
    Now is not the time to be asking. At this point it's too early to say what the value will be, what similar cars will be selling for and you'll have a better idea how you like the car having lived with it for some years.
    INTP, nerd, libertarian and scifi geek.
    Home is where my books are.
    • LandyAndy
    • By LandyAndy 15th Sep 17, 9:56 AM
    • 23,834 Posts
    • 50,482 Thanks
    LandyAndy

    Surely you'll still need a car going forwards?
    Originally posted by fiisch


    It's when they are at their most useful.
    • Jonesya
    • By Jonesya 15th Sep 17, 7:34 PM
    • 1,300 Posts
    • 804 Thanks
    Jonesya
    You've got this back-to-front, the question is not - should I keep the 3 year old car? The real question is why did you sign up to lease a brand new car?

    Look - you're paying £1500 deposit + 36 x £169.5 monthly payments, so a total of £7602 for 3 years use of the car. That's £2534 per year!!!

    A quick check shows the Hyundai i10 comes with 5 years warranty.

    So you can buy it out-right for £4128, and run it for 2 years under the warranty - you could throw it in the bin at 5 years and it would still be cheaper than your current deal (£4128/2 = £2064 per year).

    But in reality, a modern car will last 10 years - so that £4128 buys you two years of very low cost motoring, followed by a further 5 years of modest cost motoring.

    £4128 over 7 years = £589 per year.

    In case I've lost you - BUY THE CAR AT 3 YEARS. THATS THE SMART THING TO DO. ITS BUYING BRAND NEW CARS WHICH IS DUMB.
    • payless
    • By payless 15th Sep 17, 7:47 PM
    • 6,577 Posts
    • 2,339 Thanks
    payless
    Fuelled by salesman of credit and the lure of a shiny new car.

    https://theconversation.com/are-we-facing-a-car-loan-credit-crunch-here-are-the-facts-83471

    Not sayings it's is always a bad dea foe consumer l - but the way things are going, the chances of any equity at end looking slimmer


    Declaration - co-author of this linked article but no other affiliation to the site
    Last edited by payless; 15-09-2017 at 8:01 PM.
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
    • Ciwan
    • By Ciwan 15th Sep 17, 9:50 PM
    • 162 Posts
    • 21 Thanks
    Ciwan
    The real question is why did you sign up to lease a brand new car?
    Because I was stupid.

    I'm trying my best to change the above.
    Total Debts: £52,220.88
    • Jonesya
    • By Jonesya 16th Sep 17, 12:26 PM
    • 1,300 Posts
    • 804 Thanks
    Jonesya
    Because I was stupid.

    I'm trying my best to change the above.
    Originally posted by Ciwan
    Well you've done it now, take it as a lesson.

    But the calculation for buying it at 3 years old is completely different - £4000 for a 3 year old car with 2 years warranty still to run and you've owned it since new, so assuming you're a careful owner, should be in good condition with no hidden issues. That's a much better deal, assuming the car is reliable, serviced regularly and running ok at the 3 year point.
    • Ciwan
    • By Ciwan 16th Sep 17, 12:28 PM
    • 162 Posts
    • 21 Thanks
    Ciwan
    Thanks guys, I didn't think of it that way! You're right. It will be better to keep the car. I've started to save for the balloon payment at the end.
    Total Debts: £52,220.88
    • JP1978
    • By JP1978 16th Sep 17, 12:39 PM
    • 289 Posts
    • 220 Thanks
    JP1978
    Thanks guys, I didn't think of it that way! You're right. It will be better to keep the car. I've started to save for the balloon payment at the end.
    Originally posted by Ciwan
    If you are definitely keeping the car after the three years, the mileage restriction you have as part of the PCP will not need to be adhered too. Just keep up the servicing so that the warranty will still be good in years 4 & 5.
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