Hire Purchase Change

Lost_Prophet

Hi All,

I have questions. I am halfway through my 4 year HP for my car which cost £13,500 including interest (car was just short of £10,000) so I will have roughly £6750 left to pay. I pay £275 a month

Interest I was charged was 8% and APR was about 16.9% (I can't remember now so these may be wrong). I have no clue about interest on loans etc, but my sister has recently got one for a car from Tesco that she said is really good rates

I am considering getting a new car, but when I asked dealers a while back they said they would write off the HP and take the car off me. Therefore, I would be starting a fresh and would have nothing to gain from the last two years of payments. Basically, Hire Purchase = Rubbish

So, two questions:
1. Could it be better for me to take a loan out and pay off the HP with the loan then re-evaluate my options with a car that I can actually legally sell?
2. Could it be cheaper to just take a loan out to pay off the HP and keep my current car? £275 a month is steep now from what I have seen - e.g. a brand new Citroen C6 TDI for £250 a month

Thanks in advance

Peelerfart

Just because your sister was offered a really good rate does not mean you will be I'm afraid;
and slightly off topic - a brand new Citroen C6 TDI for £250 a month ?, what's the catch ? or the website ?

Hax

I would imagine for that C6 at that rate, you would need at least a 30% deposit, finance would then be over three or four years, with you having to either make a payment at the end (which will be quite significant) or hand the car back and again be back to square one...

On the Citroen website, a C6 seems to have a starting price of around £38K - are you seriously thinking that you can buy one for £250/month? It would take you 13 years to just pay the capital on the loan - nevermind any interest payments!

Lost_Prophet

Sorry, it was a C5. But it was just an example. Another example is a Fiat 500 can be picked up for £165 a month so £110 less than I am paying a month

Any ideas on what could be more beneficial with my current car as I don't see the point in getting rid of it for £0.00 and then starting a new agreement when I can wait two years and have a car that will be valued at £4,000 minimum

Lost_Prophet

Peelerfart wrote: »

Just because your sister was offered a really good rate does not mean you will be I'm afraid;

I should be offered a better rate. I earn more than her, have less financial commitments than her and also she has a dependant

Hax

Lost_Prophet wrote: »

Sorry, it was a C5. But it was just an example. Another example is a Fiat 500 can be picked up for £165 a month so £110 less than I am paying a month

In order to get a car for that price, you are going to have to either put down a hefty deposit, or you will have to make a hefty payment at the end. On Fiat's website, they state that you can get one for £500 deposit, £159/month and then a final payment of £3877.

So, once you've made that payment of £3877, you'll be left with a car that may be worth £3877

Whenever you buy a brand new car, you lose the VAT the minute you take ownership and you can expect most cars to depreciate to around 50% of their original value (if not less!) after about 3 years.

This depreciation is one of the reasons I'd never buy a new car again - I'd rather spend less money on a car that's two or three years old and to a higher specification than if I'd gone and bought a new car. Currently driving a 2006 X-Type Jag - cost just over £6K and (IMHO) is way better than a C5 (I had a bad and expensive experience with an older one of those just before getting my X!) or a Fiat 500. Next car will probably be an XJR for about £10K to £12K in a couple of years

Lost_Prophet

The cars we're just examples of what could be bought in comparison with what I have. Another example is an 08 plate BMW 3 Series D for around £11k, 30-40k miles. Payments will be similar to what I am paying now

But the point of my questions are:
Is there there a way I can sort the finances so I end up with some value left on my current car. If I went to a dealer today they would most likely just clear my finance and take my car so I am in a bad position at the moment to offer any P/X value. But if I wait two years, I get a car worth £4-5k albeit after I have paid £6750 over two years

I am not specifying a car I am going to buy, it could be a Ferrari F430 or a Robin Reliant for all I care at the moment. Establishing if it is worthwhile finance wise is my priority at the moment

jonjamie1970

Lost_Prophet wrote: »

The cars we're just examples of what could be bought in comparison with what I have. Another example is an 08 plate BMW 3 Series D for around £11k, 30-40k miles. Payments will be similar to what I am paying now

But the point of my questions are:
Is there there a way I can sort the finances so I end up with some value left on my current car. If I went to a dealer today they would most likely just clear my finance and take my car so I am in a bad position at the moment to offer any P/X value. But if I wait two years, I get a car worth £4-5k albeit after I have paid £6750 over two years

I am not specifying a car I am going to buy, it could be a Ferrari F430 or a Robin Reliant for all I care at the moment. Establishing if it is worthwhile finance wise is my priority at the moment

The simple answer to your question is no I'm afraid, unless you paid more or paid the HP over a shorter period then your never going to win or make money enough for a deposit on another car. The news is that most dealers will take a £500 deposit on something else but once again you will be loaded with the finance. What is your car worth in the trade ads ? realistically ?

My dealer offered me the finance outstanding value on my BMW 330ci last week at which I bit his hand off, I have started again with a 1 series diesel, £1k deposit and another balloon payment in 4 years.