Should we hand the car back (finance)?

Threadhead

Not sure if this is the right board, so feel free to move this if need be.

We currently have a Ford Galaxy, but due to the fact that OH is getting a company car next month, I am planning on getting rid of the Galaxy, and buying something smaller (106, 206, fiesta, clio, etc) for about £1.5-2K

However, our problem is that we still have a finance deal on the Galaxy. We have now paid about £9K for the car, the total finance we took out was £17K (I know, I know), adn as such we can give the car back and not have to pay any more money. The settlement figure at the moment is £6100, and the rough estimates we have had on the cars value is max £7K.

So the question is, should we
a - Easy option - cut our losses, hand the car back and take out a loan for the new smaller car.
b - More hassle option - take out a loan for £8K, clear the finance, sell the car, pay back a chunk of the loan, and buy the smaller car.

Any help would be appreciated, and the sooner the better, as the next finance payment is due at beginning of November, and I want to be sorted out before that is due.

Hope this all makes sense.

vansboy

First place to try, would be the dealer that you bought the Galaxy from - ask if they'd buy it back/settle finance for you.

Assuming it was new & Ford dealer, not internet broker, you'll have 1/2 a chance of dealing with someone face to face.

You can't easily sell it in, private ads - 'cos it's not yours, anyway, but the market is not too good, generally.

You MIGHT talk to your local car auction, they MIGHT get you a good trade buyer for it & settle finance for you, paying you out any amount, more than the balance owed.

The other option, is to try the 'Buy Cars For Cash' type ads in the paper, but you'll be offered much less than it's real value, not the best way to go - 'cos you'll be handling large sums of £$£ or relying on cheques clearing & so on.

If you're near a BritishCarAuction, site give them a call - at least you'll be dealing with a professional operation.

VB

wazza

first` of all the car is not really yours to sell. i think you must tell the buyer that there is finance outstanding. if you dont then when they do a HPI check it would flag that there is finance outstanding. this would put off any private buyer.

i think if taken to garage they will pay the finance off and pay you what is left over. remember to take admin costs in consideration

have a chat with the garage/finance company you bought your car from. see what are the conditions and if any penalty/admin/fines to pay to settle early. ask them if you are going to sell the car could the finance package be taken over by the new owner? if so transfer it to his name.

Threadhead

Thanks for your replies. If you check my original post, you'll see that part of the "sell the car" plan involves getting a loan and clearing the finance first. I am aware that at present the car is not mine to sell.

OH is much of the opinion that we hand the car back to the finance company. We have checked the contract, and we have paid more than we need to in order to hand the car back. But I would kick myself if we could sell the car, either to a dealer or privately, for more than £6100 (figure needed to clear finance)although I agree its less hassle to just hand it back. Its this difference of opinion that is causing the problem, I think.

Unfortunately, OH needs the car this week, so i cant go round to the Ford dealer where we bought the car to see what they are saying to it all. I was under the impression that dealers were not really interested in taking a car off your hands unless you were buying a newer, fancier, car from them, so your replies have given me another avenue to look at. (I've clicked both your thanks buttons)

ohreally

Threadhead wrote:

However, our problem is that we still have a finance deal on the Galaxy. We have now paid about £9K for the car, the total finance we took out was £17K (I know, I know), adn as such we can give the car back and not have to pay any more money. The settlement figure at the moment is £6100, and the rough estimates we have had on the cars value is max £7K.

After ½ the fianance has been paid off and if you still owe more than the car is worth you are entitled to return the car to the fianance company and walk away from the agreement. Search on the web for the finer points involved in this but it may be an option for you.

Threadhead

Thanks ohreally, again this is one of the options in my original post We did this with a car before, and it worked out fine, which is why OH wants to do this.

I know what my options are - see original post - just unsure what will be best. I think it is going to depend what the dealer can offer when I finally get there.

MarkyMarkD

If the car's value is around £7k then the chances of getting more than £6,100 from a dealer are pretty minimal. I think you are right to go for the "handing it back" option in your circumstances.

You would also probably (depending who you borrow from) incur early repayment charges if you part settle your new loan very early on - increasing the break-even point from £6,100.

vansboy

& if you are going to borrow the £$£$ to settle the finance, think about doing it this way.....

Get a settlement figure/date from the company & DON'T close the account, but pay off MOST of the balance - leave a couple of hundred, outstanding.....

Then get a FINAL settlement figure, you'll find the fees/added extra interest due 'till the next payment date, will be calculated on this, lower, outstanding balance - Should save a few £$£$£$ on charges!!

VB