Handing back a car on finance

Mr._Phil

Hi everyone,

I've got a quick query. I've been offered a job abroad and I'm thinking of taking it. My only real commitment is my car, which I bought in October 2009 on finance. I have approximately £12,000 left to pay, and despite getting what I thought was a good deal, it's unlikely that the car is now worth this amount.

I've read about the 'half rule' but this doesn't apply to me. Is there any way I can essentially hand the car back to the finance company and cancel the loan without this having a detrimental impact on my credit report?

motorguy

The simple answer is No.

They will take the car back, sell it at auction and pursue you for the difference.

Your best bet would be to sell the car privately and make up the difference yourself to clear the finance.

drew2k9

how far abroad? is there any possibility of taking the car with you or is it an expense that would prevent you from being able to live abroad?

you can sell while finance is still on it and get it sorted that way, pay back the outstanding finance with the sale of the car and then you might have to cover the rest yourself. depends on the value of the car vs the amount of finance left on it.

INT1

How does the half paid rule not apply to you?

mrscb

aldo wrote: »

How does the half paid rule not apply to you?

Probably as there has probably only been 5 payments since purchase.

INT1

But if you made a payment up so you have paid up or over half that amount, you can hand the car back.
If the value of the car has depreciated that much I would think this is the most sensible suggestion.

Mr._Phil

Thanks for your suggestions so far.

Drew, I'll potentially be moving to Shanghai, so it'll be quite a job to take it with me.

Aldo, I was only assuming that the half rule wouldn't apply to me because I only purchased the car in October.

I'm not sure what the value of the car actually is. It's probably worthwhile me finding out the value and comparing this against a settlement fee from the finance company, although I'm not sure what the most accurate method to gauge the current value would be?

I have heard about a 'third rule' but there doesn't seem to be any clear information on this. Could anyone clarify?

Thanks!

drew2k9

you could alwasy drive it to shanghi...?

i see your point there lol!

i would think with that few payments being made there would be some sort of clause allowing you to get out of the finance deal at this stage, but it may be worth finding the copies of the finance forms you signed and having a good ole' read of the small print to see if there is anything there that could clarify it or help you out.

INT1

No doesn't matter when the half amount is paid, it will work in there favour but not in yours as most of your settlement is the bulk of the interest.

INT1

Did you put any deposit down?
Eg
If car was £9K, and you put down 3K deposit, you would only have to have paid £1500 in payments to have reached the halfway point at which point the car is returnable with no penalty (though no profit).

If you have paid over a third, the car cannot be repossessed (without a court order)

motorguy

aldo wrote: »

But if you made a payment up so you have paid up or over half that amount, you can hand the car back.
If the value of the car has depreciated that much I would think this is the most sensible suggestion.

So if he owes around £12000 after 5 payments, we can assume the total cost of the finance was around £14000? Therefore 50% of that is £7000

Are you really saying it would be a good idea to hand the finance company £5000? :eek:

If the O/P believes he got a good deal in the first place, then you'd have to assume his car would be worth considerably more on the open market than £7000.