Car Swap

fiscalfool

Hi Folks,

In an attempt to reign in my spend on my gas guzzler I've been looking at my options.

It's 18 months into a 5 year "Personal Loan" arranged with the car. Therefore I owe significantly more than the car is worth. The car however is costing a fortune to run with the petrol prices rocketing.

I don't have any vehicle return options via the finance company, other than voluntary surrender of the vehicle, where they take it and auction it. It would then attract a lower price then if I took it to a main dealer, and I'd still be liable for the rest.

So, assuming the car is worth 10k at present ... is it feasible to go to a car dealership and look for "cheaper to run" cars at just under 10k? Would any dealerships do a straight swap, minus a small amount for admin fees? I know that towards the end of a financial period, some car dealers are very keen to show sales in quantity sold, and sometimes not too worried about making a huge margin on some vehicles. Hence my thoughts to be open with them and say what I wanted to do.

My issue is that I'm currently in a DMP and cannot take out any new finance, or change my existing one.

Ideally I'd get rid of the car completely ... but I don't see a cheap way to do that.

Thanks in advance.

Strider590

Get rid of car, get rid of debt.... Buy an older car for considerably less and spend the money on more important things.

Some people pay more per month for their car finance/loan than they spend on their mortgage, I see this as utterly stupid to be honest.

fiscalfool

Hi Strider, Thanks for the reply.

To be completely honest, my initial plan ... was to get rid of the car in any manner in which I can. Yes, ok, I'll end up owing the deficit ... BUT

If I can dump the car, then I can get work to provide one for me, and whilst my payments would remain same or slightly lower, I wouldn't have to buy tax, tyres, insurance, MOT, servicing etc. Plus my fuel could/would be much more efficient.

I'd been considering BR or IVA shortly anyway, but needed to tie up a few loose ends first ... such as sale of joint owned property.

wba31

fiscalfool wrote: »

Hi Folks,

In an attempt to reign in my spend on my gas guzzler I've been looking at my options.

It's 18 months into a 5 year "Personal Loan" arranged with the car. Therefore I owe significantly more than the car is worth. The car however is costing a fortune to run with the petrol prices rocketing.

I don't have any vehicle return options via the finance company, other than voluntary surrender of the vehicle, where they take it and auction it. It would then attract a lower price then if I took it to a main dealer, and I'd still be liable for the rest.

So, assuming the car is worth 10k at present ... is it feasible to go to a car dealership and look for "cheaper to run" cars at just under 10k? Would any dealerships do a straight swap, minus a small amount for admin fees? I know that towards the end of a financial period, some car dealers are very keen to show sales in quantity sold, and sometimes not too worried about making a huge margin on some vehicles. Hence my thoughts to be open with them and say what I wanted to do.

My issue is that I'm currently in a DMP and cannot take out any new finance, or change my existing one.

Ideally I'd get rid of the car completely ... but I don't see a cheap way to do that.

Thanks in advance.

You say it's a personal loan? not HP? So does the loan company have any say on your vehicle?

I was in a similar position to you, had a 2.2 Diesel Accord, worth £5k. My fiance passes her driving test, and the Accord was far too big/powerful for her, so we needed something smaller. I have a loan from Santander for the Accord, and because I had only had it a year hadnt cleared much of it. I sold the Accord for £4700 on Autotrader and bought an similar age Civic for £4000. I still pay the loan at the same rate, but had £700 to go towards the wedding (and her being added to my insurance).

fiscalfool

Hi WBA,

My understanding is that Santander have no call over my vehicle at all. When I took the finance out, it was arranged by the dealership who told me that Santander were keen to get their business, so bent over backwards to accommodate me.

Anyway, I called Santander to change some details recently and deliberately said "Oh, when can I Voluntarily Terminate the car". The woman said "One second ... Oh sir, erm ... you can't ... we have no charge over your car, as yours is a personal loan based finance. Your only option for early vehicle disposal is Voluntary Surrender, whereby we collect the car, take it to auction and then put the proceeds towards the balance of the loan."

So ... very rough figures:
£15k outstanding
£10k Value of car

If I go BR or IVA, then the car would go anyway, and the remaining balance would be tied up in the BR/IVA.

Alternatively I could see if I could part-ex (without outlaying any more) at a dealership for something more economical, and see if I can reduce the burden on my finances.

Problem is, is that it is a big car which guzzles the fuel. Ideal for senior management types where it's provided for by their employer, but not an ideal second hand car. Certainly not in present economic climate.

JQ.

Have you asked for an early settlement figure on the loan? How much was the original loan?

frothey

Yes, you can "buy" a car and get cashback - there shouldn't be any admin fee's as it's no different to any normal deal. at the end of the day it's no different to the dealer buying the car from you for £10k cash, then you walking straight back in and buying another. The only questionable bit is whether the dealer wants to lumber themselves with your "gas guzzler"........ and if not whether they can get what you are hoping for it from an underwriter.

fiscalfool

JQ. wrote: »

Have you asked for an early settlement figure on the loan? How much was the original loan?

No, I haven't asked for early settlement yet. I guess I might save a small amount on the interest paid back for early settlement.

But still, the rough figures are:
20th Payment of 60
£15500 Remaining

Car value according to Parkers, £11.7k (Part Exchange). £13.2k - £7.5k (Private)

@ Frothey ... My only hope I guess is that they will be keen to be seen to make a sale on the books, even if it's just in terms of one extra car sold.

JQ.

Surely you'll save a significant amount of interest if you pay the loan back 3 years early? Depends what you signed I guess.

First thing you need to do is get that early settlement figure from Santander - you might be surprised. Plus you can't do anything until you know exactly how much you owe.

fiscalfool

Very true ... I'll give them a call. Thanks.

fiscalfool

Update ... called ... £13k ... so maybe not too much of a huge hit.