Struggling with current repayment commitments, seeking advice

C22DTJ

Hi there,

I'll start with a bit of a personal history since I'm new and want to give an idea of where I'm at.

I'm a 27 year old, currently living with my fiancee in her house which is privately owned by the family and on which we are charged a very generous (read; low) monthly rent.

I've just finished a BA Hons which I studied part time whilst working as an assistant 3D Designer on a pretty low wage.

I'm now looking for a new job, but due to the current market and state of my chosen industry (Architecture) I am not hopeful of finding work fast, and even then, I'll be likely starting on a salary not dissimilar to what I am on now.

The problem is, I'm struggling badly with my current finances and need advice on my options. Currently, I'm running out of money every month where I am having to borrow from my fiancee, or my parents (which of course is incredibly embarrassing), and this inevitably sets me up for failure the following month when I have to pay them back. We're only talking £50-£100 to cover essentials like groceries, but nevertheless, I'd like it to be £0.

I have two outstanding debts, which cause the most problem. I do have phone bills and a broadband bill, but both are essential and both are as low as I can get them to suit my needs (£30 phone, £12 broadband).

One debt is a personal loan I took out two years ago to clear a bunch of debts I'd racked up as a student on things I splashed out on... computers, gadgets etc. The loan was for £6500 and the interest rate was above 15% (I'm not sure what it is exactly), I pay £205 per month on that and I have about 2-and-a-half to 3 years remaining on it.

The other, is a shameful debt that I feel awful just thinking about... primarily because I regret it. Last year, my partner and I had just received huge repair bills for our cars and we'd both had problems with cars in the past. We evaluated our situation and in a moment of what can only be described as stupidity (in hindsight) we somehow came to the conclusion it would be a good idea to sell both our cars (for a cumulative £2500) and splash out on a brand new Mini on a 4 year PCP.

Needless to say, almost one year later and I cry a little inside every time I see the £198 come out my account every month. Granted, my partner pays her half, but it's still a debt I could do without.

So I'm just looking for some advice on how (if at all) I could reduce those debts or even get out of them somehow (hand the car back?).

I don't have any credit cards or other outstanding finance, and I've never missed payments or anything on the debts I do have, but due to my low income and lack of solid employment history (prior to being a student I did general retail work, mainly in guitar/instrument shops) I wouldn't have thought I'm the strongest candidate for low rate consolidation loans or anything.

Thanks for reading if you have made it to the end and I look forward to hearing your thoughts.

Apples2

Firstly well done to you for not falling into the Payday loan trap, many in your position fall into it with absolutely no way out.

Embarrassment aside, if they are happy enough to lend, and you maintain your side of the deal, long may it continue. Please don't enter into any borrowing agreement with a formal lender now, you already recognise you are unlikely to be in a position to maintain the repayments. A consolidation loan is what got you here, don't think a second will be any better.

Look at your PCP contract in detail. Look specifically at your rights to terminate. If it were a HP deal, you could VT at the half way point. PCP may not be the same due to that huge balloon at the end.

There is an unlikely alternative, that is to find a buyer willing to take over the payments. With car prices the way they are though, not realistic.

C22DTJ

Thanks Apples2, much appreciated.

Ok I'll steer clear of further loans, I suppose it's not the best way.

In terms of the car, I haven't read into the terms yet but as you say, it's unlikely I'll be able to hand it back. I know I can VT after 2 years and lose the car + deposit without any outstanding balance, I'm not sure where I'd stand right now though.

The difficult thing is, even if I could hand the car back, I still need transport, and knowing me I'd end up with some heap of a money pit that I had to resort to buying with the little money I could get together. That's one benefit of a new car, is the warranty and service plans. It's just a shame I didn't buy something other than a Mini. You can get a little Toyota for less than half what I pay for the Mini and from what I hear, they're great little cars!

Ah yes payday loans, fortunately I would never in my life consider such a thing. I've had the misfortune of seeing some of their TV commercials, and I honestly thought they were a 'prank' when I saw the interest rates flashed up on screen. Even if I didn't have such a generous and understanding family who help me out, I would sooner go hungry than hand over 1700% APR...

KingElvis

Ahh I feel sorry for you, Minis like Ipods, Ipads and other junk are what I call "Desire Items"....these things make people put common sense behind logical reason and most end up regretting it.

I would examine the paperwork carefully and see if you can hand the tin can back and get something which isn't costing you and arm and a leg to drive around in.

Good luck.

C22DTJ

I agree completely, it was the desire factor that got us I think. I mean, it's a good car, and it's certainly reliable and solid, but it definitely doesn't offer anything more than a number of much cheaper alternatives.

I've spoken to BMW Financial Services to find out about my options. I can't utilise VT for another 20 months unless I fork out almost £4500... which obviously I won't be doing.

The other option is to buy out the agreement for £11400. Now, it appears as though the market value of the car (judging by private rates on Auto Trader) is about £12500-£13000. The problem of course is that I'm not sure how easy it would be to sell it whilst it's under a finance contract. BMW FS said it is possible for a potential buyer to pay them directly, but again, finding a buyer happy with that may be difficult.

There do seem to be a number of cars (albeit smaller, but actually more economical and free to tax) currently available around the £100-£120 p/m region on 36 month PCP plans. On paper, if I was able to get rid of the Mini (which is 12 months into a 48 month deal), I could get one of these cheaper cars on a 36 month plan and save £80-£100 p/m and retain personal transport, and without extending the length of my debt.

Has anyone got any thoughts on this?

Southernman

Oh God i would love a Mini.