Existing car finance when buying new car?

katmcleod

My husband and I are expecting a new baby in December and since we only had a 3dr corsa just now we're hoping to buy another car.

But we still have £4.5k left to pay in our loan and I think realistically we can only get £3.5k selling on the car privately.

So if we use the £3.5k to pay off some of the loan, what happens to the other £1k left on it? How do we pay that off?

We'd be taking out finance to buy a new car, can we add the £1k to that loan or can you only take out finance to cover the car itself?

Would we need to get a loan from the bank instead so it's just cash in our bank and we use £1k to pay the existing loan and the rest to buy a car?

Not really sure what our options are can anyone give us any advise?

CLAPTON

I'm sure a new baby can fit into a three door corsa.

I would have thought that with the expenses of a new baby the last thing you would want to do is incur un-necessary expense.

However, what sort of loan do you have on the car.... HP, personal loan ?

katmcleod

We already have another child and all the babys things already. But we can't fit two kids and two dogs into the back of the car as well as a pram, so we need to upsize again. This wee one was a surprise so we weren't expecting to have to get another car again so soon.

Not sure what type of loan it is? We took it out through the dealer when we bought the car, we didn't go to the bank or anything. How would I tell?

CLAPTON

if it's an HP agreement it will say that somewhere at the top of the agreement.

katmcleod

Yes it is Hire Purchase

CLAPTON

If it's HP then you don't actually own the car and it will appear on the HPI index.
So you will need the permission of the HP company to sell the car. They will almost certainly want a full settlement.. best to ask them.
They may be prepared to do a new HP deal for the next car although you are probably paying a lot of interest... what is the APR of the deal?

I would think you would do better to get a personal loan but it all depends upon what APR you can get.

katmcleod

APR at the moment is 16.7% with GE Money but we've a missed payment on our credit history from February 2007 so I think that's probably what we would expect to get.

When you say that they might do a new HP deal, does that mean we could go to them directly to see about changing the finance, rather than having to do it through a dealer?

Looking at it now it says if we pay it off now it will cost us £3836 so we'd only have a few hundred left after selling the car for £3500. Could we use the money from the sale to pay off some of the existing finance, then transfer the balance onto a new HP deal for another car?

Sorry for all the questions but you've been really helpful so far, I feel like a bit of a novice in the car finance world.