expensive car payments!

judekazama

my car payments have become too high due to a change in personal circumstances. I have got the settlement figure for the finance which is £1180 higher than the value of the car. This means I can't get a cheaper car due to the negative equity. I have only had the car for 1 year. Has anyone got any solutions.

climbgirl

Hard to offer help without knowing the full details....can you post an SOA here? People may be able to suggest ways of cutting back that you haven't seen before.

You may already know this, but it's illegal to sell a car that still has finance owing on it (certainly without the finance company knowing about the sale). So don't rush into trying to sell the car...

lazy&indebt

Unfortunately, there'n not alot you can do without loosing cash in one way or another. I know half way through the term you can hand the car back and walk away but that still leaves you with the problem of transport! Until then I'm afraid there will be negative equity!
I have a car on HP and investigated from all angles and it seems as if the only sensible money-saving thing to do is to keep the car for the term, unless you REALLY can't afford the repayments?

judekazama

we've looked at other ways to cut back and implemented these but the car is still costing us £188 finance, £200 petrol and £45 insurance per month (cheapest we can do)...

DontDoDebtKids

Maybe someone who knows a bit more about it can help, but I would echo lazy&indebt's comment:

Hand back the car to the dealer - just drive it to the forecourt and hand them the keys and, obviously, tell the finance company.

Warning: You'll have to look it up in more detail. I'm not sure that the above still work or how you are meant to go about it. The finance company/dealer will NOT like it.

If it is possible, it seems the wise thing to do in this situation.

lazy&indebt

Well other than having no car and oweing £1180 for something you don't have I'd probably hang on to it. Can you definately not afford it? I don't know if maybe someone would take the finance over?

Sponge

Where did you get the valuation for your car? Can provide the details on it, e.g make, model, age, mileage? Just so we can double check the car's not worth more, or less, than you think.

I can see 3 options:

1) Keep the car and stuggle through until you break even
2) Refinance the car over a longer term to reduce your monthly payments. A slant on this would be to return to your dealer and see if they can exchange it for another vehicle, and finance package, with lower monthly payments. Maybe a diesel? A smaller engine? Cheaper to insure?
3) Sell it and pay off the finance. Do you have that sort of cash, or would it require another loan? But if you need a car, that will mean you still need to save or get finance on a new (older) one.

rog2

judekazama wrote:

my car payments have become too high due to a change in personal circumstances. I have got the settlement figure for the finance which is £1180 higher than the value of the car. This means I can't get a cheaper car due to the negative equity. I have only had the car for 1 year. Has anyone got any solutions.

Certainly if your finance was less than £25,000.00 there is a clause which allows you to hand back the car if you have paid more than a certain amount (I think it is 50%, or two years). However, as you say, this will leave you without a car.
I know, to my cost, that Car Finance is a minefield, but, and especially if you are with a reputable finance company, there should be options available, for example - reduced payments for a short period whilst you recover financially, or 'downsizing' (changing for a cheaper car, to reduce payments).
Was your finance actually tied to the car, or is it a personal loan?
I got, albeit too late (my car was 'repo'd' and I have lost the lot) a lot of good advice from CAB and others on this forum.
Post a few more details, i.e. original price of car, amount of finance, ype of agreement and name of finance company, then maybe more of us can advise.

yung

judekazama wrote:

we've looked at other ways to cut back and implemented these but the car is still costing us £188 finance, £200 petrol and £45 insurance per month (cheapest we can do)...

can you get a loan for that amount to settle the car. I just had a look on nationwide for a loan of £1200 over a year is £116 protected or £107 without that is a saving of £81/£72 PM

shayshay

Have you got Gap insurance on the finance?

judekazama

Hello thanx for all your suggestions, how would I find out if I have gap insurance, I seem to think I have got this...what does it do?