Negative Equity on a car

oakworth

Guys,

This is my first post and I have a dilemma with a car loan. I bought a car 2 years ago on 4 year finance (with FGA Capital). I've recently been supplied with a Company Car and decided to sell the car and settle the finance. To cut a long story short I have sold the car to a good friend for a figure approx 4k less than the quoted settlement figure. My intention had been to hold onto the sale money and continue to make the payments until the negative equity had gone. My friend was aware of my plan and comfortable with my approach. We both assumed that as long as I continue to make the payment there will be no real issue.

As my friend has registered the car in his own name, DVLA have advised FGA of a change in the reg doc. They have written to me and inquired as to the nature of the change.

Clearly I need to sort this out now ASAP. I'm open to any advice. My credit rating is fair (recovering well after a divorce) so not convinced banks would help.

One option I've considered is to explain the situation to the finance company, offer the 17k I have from the sale and ask to pay the remainder off over 4 months.

BoGoF

Bottom line is that car wasn't yours to sell. It belongs to the finance company until the final payment is made.

You are really at the mercy of the finance company, they may agree your proposal they may not.

silo24

If this was an HP arrangement, the Halves and Thirds rules could apply.

Under this, if you have paid 50% of the value of the Finance agreement, you may well have been within your rights to hand the vehicle back to the finance company with no further to pay. They usually then try to sting you with refurbishment costs, but these would have been less than the 4k.

Don't know if it would be too late to enact this, i.e. get the DVLA to re-instate you as the current keeper without increasing the number of previous owners etc....

vax2002

The finance company will get wind of the keeper change and send someone with a tow truck to repro the car from your "mate".
The car will then be sold at Auction and you will be defaulted for the difference which will be payable in full
Rather a silly plan.
PS Dont spend the 17k !

oakworth

Thanks guys, bad news but probably what I suspected. Have managed to get my hands on the 4k and will phone the credit company to settle the debt. Will tell them that my mate got a bit ahead of himself by sending in the reg doc. Hopefully that should do the trick.

27col

Explain your idea of the concept of negative equity when referring to a car. The second that the car leaves the showroom it has depreciated, so you are always going to be in negative equity.and it will never be in anything other than negative equity. I am assuming that the definition of negative equity is that the item is worth less than the amount owed on it.

oakworth

Quite. I have sold the car for 17k and the settlement figure is 21. At the moment all I've had is a letter from FGA saying they've been informed there has been a change to the V5 and they need a copy if the updated version.
Will give them a call in the morning.

rs65

27col wrote: »

Explain your idea of the concept of negative equity when referring to a car. The second that the car leaves the showroom it has depreciated, so you are always going to be in negative equity.and it will never be in anything other than negative equity. I am assuming that the definition of negative equity is that the item is worth less than the amount owed on it.

Not always. Depends how much of a deposit you pay.

fatbelly

Oakworth wrote: »

Guys,

This is my first post and I have a dilemma with a car loan. I bought a car 2 years ago on 4 year finance (with FGA Capital).

What sort of finance was it? What does the agreement say?