Car loan disaster

Greyhorse

Hi everyone.

I have managed to get myself into a mess and could do with some advice. Feel free to shout at me as I am stupid.

I took out a car loan over 5 years when I was living at home for 18k (interest takes the loan to 26k) over the 5 years.
I am now in major financial difficulty due to loosing the family home and having to find somewhere to live on my own therefore not being able to afford the repayments of 400pcm.

I need rid of the car but how?
The car is in negative equity and is now worth around 12k.

Should I give the car back, pay the remainder and buy an old banger to tie me over?? Will this reduce the interest or will I still owe 26k?

Thank you all from one rather embarrassed and drowning in debt greyhorses

gb12345

More info is needed -

Is this a loan or HP, how long have you had the finance?

Greyhorse

I am not sure. I got the loan via the car garage however it is with lloyds tsb at full repayment (no balloon repayment) for 5 years.
I have had the car 11 months so far :-(

manzanilla

Sorry but you HAVE to find out if it is on HP or you just borrowed some money which you happened to spend on a car, as your options are completely different in these circumstances.

Also do you have other debts?

Greyhorse

No other debt.

What is the difference between the two exactly? I have no idea!

manzanilla

If it is on HP then the finance company owns the car and you cannot sell it. If you just took out a normal loan, then you own the car and you can sell it.

Caz3121

what does the paperwork say on the top?

basically, if a loan then the car is yours and you can sell it. If it is HP the car belongs to the finance company

Apples2

Get the agreement out and tell us what it says at the top

claret_mike

loan allows you to sell car

hp means you cannot

System

Greyhorse wrote: »

The car is in negative equity

Unless you are buying a collectable car then they are always in negative equity

gb12345

Greyhorse wrote: »

I have had the car 11 months so far :-(

In that case you won't have paid half the payments, so handing the car back is not an option (assuming it was HP in the first place).

As others have said, you need to know exactly what type of finance you have as that will determine how easy it will be to sell the car.