Buying new car - finance related question..

uberboy

Hi there,

I wonder if people could give me some advice with regards buying a new car.

I currently drive a car that I got on a 0% interest for four years deal, and have just under 2 years left to run, totalling in £4000 left to pay.

Now say I were to want to buy a car worth £12k from a dealer, how precisely would I go about it??

I mean, I have checked and my current car should fetch circa £6.5k p/ex or around £7.1k should I sell privately. This would then leave a balance of around £5.5k.

Obviously I could finance the shortfall via a personal loan, but what about the outstanding finance on my old/current car? Ideally given as it is an interest free loan is it wiser to keep paying that myself independently of the personal loan or any finance arrangement i make with a dealer? Can I do that?

Any type of advice would be gratefully appreciated

xycom1

If the £4K finance outstanding is secured on the car (i.e. if it's a car loan rather than an ordinary unsecured personal loan), then the dealer that you trade the car in to will probably want the finance cleared before accepting the car. Either they will pay you the money and want to see proof that the finance is settled, or they will settle the finance directly for it, and deduct the amount from what they give you in trade-in.

e.g. if I look in Auto Trader and buy a second hand car with finance outstanding. If the original owner defaults on payments, the finance company can repossess the car from me! (even though I paid fair and square for it). So it's usually recommended that when buying a second hand car with finance outstanding that the buyer settles the finance directly and then pays the difference in value directly to the seller of the vehicle on handover, etc.

uberboy

Many thanks for the advice. Yes I was unclear about how the outstanding finance would be resolved.

Thanks again

highguyuk

If you get rid of the car you've got finance on, it has to be settled up...

nej

I've twice traded in cars with outstanding finance - the dealer just settles it direct with the finance company.

Lob_Rockster

you'd best clear the car loan which is at 0%
Bought from new and selling after 2 years? :eek: Are you sure you want to take the hit?

What was the purchase value of the car - not 8k, I assume?

plane_boy2000

I think its illegal to sell a car still on finance as you dont hold title to the goods - i.e. the finance compnay own the car (not you) until you have made the final payment and discharged your liability, however if you took it to a garage they would probably take it in and settle the finance for you.

uberboy

Yeah don't get me wrong, I have no intention of defaulting on the finance!

I just was unclear about how I dealt with it, whether I would have to pay it off in one bulk sum etc.

Thanks for the replies.