Advice Needed - How best to get out of Hire Purchase Agreement

True_Blue_3

So in April I entered a 3 year Hire Purchase, final payment scheme with Ford, called Ford Options for a ford Mondeo. It sounded like a good deal, however the man who sold me it was very vague, really did not explain the deal at all to me, and then I realised I was supposed to be told I could take the forms home to read, but he told me to sign them there and then, and by then it was too late to back out. It is costing me £320 a month. Also I looked at the interest and if I purchase the car in full, you end up paying an extra 3 grand for the car. If you do not wish to purchase the car, you simply hand it back after 3 years. Excess mileage, unacceptable damage etc are then charged to your balance when you hand it back.

For various reasons, I now cannot even drive until next year, so I potentially have a car that is costing me £320 a month that I cant even drive and is sat in the garage.

Now I know that if I simply giving it back isn't an option, also my mum has said the best thing could be to garage it, simply keep paying and if its garaged it will keep its value, however I didn't want to buy it at the end of the agreement.

I was thinking myself, would take out a personal loan, then buy myself out of the agreement by paying for the car in full, then pay back the personal loan with the sale proceeds? Obviouslt as its a brand new car I would have lost a few grand either way when it was driven off the forecourt so I accept that. I'm going by the logic that the quicker I get out of the agreement, the less interest I will pay, and also the balance on the loan would probably come to less than what Im paying already a month for it. Im also in the mind to accept I will have to pay 9k over 3 years and just be stuck with it.

Anyone else been in this situation??

Also apologies if this is in the wrong forum, I am new here.

27col

I don't know where your mum got the idea that a car sitting in a garage would keep its value.
Your plan to take out a personal loan is ok in theory. But you will have trouble getting a loan, in view of the financial commitment you already have, I think..

eschaton

True_Blue wrote: »

So in April I entered a 3 year Hire Purchase, final payment scheme with Ford, called Ford Options for a ford Mondeo. It sounded like a good deal, however the man who sold me it was very vague, really did not explain the deal at all to me, and then I realised I was supposed to be told I could take the forms home to read, but he told me to sign them there and then, and by then it was too late to back out. It is costing me £320 a month. Also I looked at the interest and if I purchase the car in full, you end up paying an extra 3 grand for the car. If you do not wish to purchase the car, you simply hand it back after 3 years. Excess mileage, unacceptable damage etc are then charged to your balance when you hand it back.

For various reasons, I now cannot even drive until next year, so I potentially have a car that is costing me £320 a month that I cant even drive and is sat in the garage.

Now I know that if I simply giving it back isn't an option, also my mum has said the best thing could be to garage it, simply keep paying and if its garaged it will keep its value, however I didn't want to buy it at the end of the agreement.

I was thinking myself, would take out a personal loan, then buy myself out of the agreement by paying for the car in full, then pay back the personal loan with the sale proceeds? Obviouslt as its a brand new car I would have lost a few grand either way when it was driven off the forecourt so I accept that. I'm going by the logic that the quicker I get out of the agreement, the less interest I will pay, and also the balance on the loan would probably come to less than what Im paying already a month for it. Im also in the mind to accept I will have to pay 9k over 3 years and just be stuck with it.

Anyone else been in this situation??

Also apologies if this is in the wrong forum, I am new here.

Signed an agreement for £320 a month that wasn't clearly explained to you - you sound like a salesman's dream.

Also - stop listening to your mum who appears to know nothing about cars. How would a car retain it's value by being kept in a garage?

Any exit from this deal is going to see you lose a lot of money. Read your agreement now seeing as you didn't when you signed it and see if you have any options for early settlement.

Also bear in mind a loan may be harder to obtain as you already have a large credit agreement in place. Do you have a good income?

eschaton

27col wrote: »

I don't know where your mum got the idea that a car sitting in a garage would keep its value.
Your plan to take out a personal loan is ok in theory. But you will have trouble getting a loan, in view of the financial commitment you already have, I think..

I didn't copy your reply, I just took that long to type the reply as I was watching TV at the same time

True_Blue_3

Well I applied for a credit card recently, expecting a small limit and they gave me a 9.5k credit limit on it, that was on top of already having this car loan. This is awful Well my mums theory isn't totally without foundation, I think she meant it would hold more value with a very low mileage. Obviously I know all cars depreciate quickly in value.

The salesman was awful, he even said if I hand it back and its worth more than expected I get the equity I put into the car back. Surely there isn't any equity in a car? :S

I was just wondering if anyone had been through this nightmare? I think the best thing would be to just ride out the three years, make use of the car, and learn my lesson.

I do want to get out of it but it sounds such a pain, I certainly will not be entering into any credit agreements again like this.

True_Blue_3

I assume all credit agencies are linked and they can see how much personal agreed credit an individual has at their disposal? Or theyd look at the £320 a month outgoing and work out that I also couldn't afford the loan?

paddyrg

Your mum's right in that sitting in a garage will reduce the rate of depreciation, but make sure you keep taking it out round the block once a week or so or you'll have leaks, flat batteries etc.

eschaton

paddyrg wrote: »

Your mum's right in that sitting in a garage will reduce the rate of depreciation, but make sure you keep taking it out round the block once a week or so or you'll have leaks, flat batteries etc.

OP can't drive until next year. Insuring and taxing vehicle for someone to take it round the block will cost even more.

OP - why did you buy a car that you can't drive?

£11,520 over 3 years is an expensive lesson.

claret_mike

It sounds like a PCP type deal where if your car is worth more than the guaranteed future value then it may work in your favour if you wanted to enter into another PCP deal.

For example - if they say that considering the 30,000 miles you are going to do over the 3 years you have it, they will have estimated what they think the depreciation is. Lets say for example its £5k

If you do less miles or if you negotiated a lower guaranteed future value and you have only done say 15,000 miles then the car may be worth more than what they have estimated. Lets assume £6k for arguments sake.

That will clearly mean that if you were to buy it for the guaranteed future value of £5k and then sold the car or used it to get your next car for its true market value of £6k, you would have gained from that perspective.

I think you will have learnt your lesson, if you do not understand the deal or figures etc, then do not sign anything. The salesman may have been truthful with you but because you do not understand you are saying he is awful?

redhotpepper

I agree that it sounds like a PCP deal. Have you got Return to invoice Gap insurance on it by any chance? Never buy a new car without it. If your luck changes for good in next few years you may not burn all your fingers. If not, cut your losses (atleast you do not need to pay interest and then the car depreciates as well) fast. Fords depreciate more than equivalent audi or bmw. However depends what kind of discount you have got. Better sell it fast before the september new plate comes along as it will be valued still less.
If I was you, I would log into Glass guide which is free, check on autotrader what equivalent car is selling for and take a deep breath and dispose it. Having being in your place, I know how much mental trauma it is to see something sitting in your house which you despise reminding you all the time of your mistake. I am yet to recover.

dealer_wins

Drink Driving is my best guess!!