Clearing car finance - Black Horse

neild7744

Hi,

Im trying to save for a house and stupidly bought an expensive car on finance over a 5 year period (2 years ago). Im now wanting to finish the finance early so i can save an extra £300ish a month.

These are my thoughts on how to do it...

1) Find out a settlement figure from the finance company.
2) Value my car.
3) Sell the car, cash in hand or instant bank tranfer.
4) Ring up the finance company and clear the debt.

I know technically id be selling a car they own (as i havent completed my HP agreement), but carrying out a sale quickly to clear the debt, could this work and be done, even though its illegal in the eyes of the finance contract?

I obviously understand the other way which would be to use a credit card/additional personal loan to pay the finance company, sell my car and then clear the loan. Reason im not keen on this idea is 1) I dont want to be applying for credit a crazy amount to affect my credit rating (as its currently good) and 2) I risk paying interest on finance and a personal loan if my car doesnt sell and 3) Its a bit more hassle.

Any help would be great. I really do need to get out of this agreement. I think my car maybe still worth more than what i owe, so am hoping to change to an economic little run around whilst i save for a mortgage.

Thanks

kenh11

Handing back a car to Black Horse Finance in literally 10 days time.

I know how difficult they can be.

I was basically stuck in a situation with them for a long time where I was struggling to pay, luckily I got a PPI refund which I used to pay the car off to half way.

What you can do if plausible is request a VT (Voluntary Termination) form, which will show the Liability (how much they think you owe) and how they would like you to pay. From what they were saying to me, you can suggest a manageable payment plan so you can pay how much you can and when you can, whilst having the burden of the car gone.

As far as actually selling the car yourself goes, I doubt that would be feasible. Not many prospective car buyers out there are keen to buy cars with existing finance on it.

Sorry can't be more help.

PS - double check on the value of your car, quite often the car depreciates massively while the finance agreement keeps going on and on. Just having paid my car to halfway, Ive actually paid more than what its now worth.

NeverEnough

Depending on circumstances, you can sometimes arrange a sale with the full knowledge of the buyer and the Finance Company, who MAY allow the sale to go through with funds directly paid to them within an agreed period - 2 or 3 days max. It depends on what you owe and the car's value of course - you could even part-ex the car via a dealer for a much cheaper car or if there is equity in the car, a dealer may be persuaded to buy it off you - but you will have to be upfront about the finance. Perhaps start by asking Black Horse what the settlement figure would be at this stage, just to give you an indication of feasibility.
Also, if its an HP agreement, you can hand the car back at the halfway stage and you are getting on towards that now, so perhaps that's an option.

kenh11

Yes halfway is important, thats what I was alluding to in my part about VT, but didn't actually mention halfway - doh!

Good luck with this neild

michef

Check your original agreement, not all loans offered the 'halfs and thirds' rule, depends if it was a credit sale or conditional sale. Check the small print. Had reports from some of my customers that have handed the car back after paying half and this has had negative effects on their credit file, once a VT'er always a VT'er in the funders eye and it makes prospective car finance companies nervous to re-lend if youre likely to VT again.

Do get a settlement figure then you know where you stand, was the car brand new 2yrs ago, if so and its still in warranty take it to a franchised dealer, they may buy it from you and settle the finance (hopefully it will cover the settlement figure) you may need to fund any shortfall though. (the dealers are short of good used cars due to the delay in new car production most people who normally change after 3yrs have been extending their agreements - hence fewer 3yr old cars on the market)

hope that helps