Negative equity in new car finance?

Pixie_girl

Hi all. I was hoping someone could help me. I had negative equity on a car and the new car company I was hoping to buy from wrapped this negative equity up into a business hp agreement (not personal as per my previous agreement). I signed this unaware that this was a different contract and that I effectively signed away my consumer rights. I know I should have read the contract thoroughly but I didn't and was in a rush to buy the car. Also I didn't realise that I got such a poor deal on my old car and the negative equity wrapped up in the new deal was 10k! I'm now owing the 10k and I can't settle early without paying back ALL the interest on the new agreement (18k!) as they don't recalculate interest under business contracts. Please help. I feel I've been well and truly screwed.

bodgerx

Sounds pretty bad.

How far are you through the payment plan? There maybe provision to walk away and hand the keys back if you have paid 50% or more...

marlot

Were you buying as a business or as a consumer? If they mis-sold you, there may be a way out?

motorguy

bodgerx wrote: »

Sounds pretty bad.

How far are you through the payment plan? There maybe provision to walk away and hand the keys back if you have paid 50% or more...

It sounds like the agreement their on doesnt allow for this.

Maybe the O/P can check and clarify? It will say so on the agreement.

motorguy

Pixie_girl wrote: »

Hi all. I was hoping someone could help me. I had negative equity on a car and the new car company I was hoping to buy from wrapped this negative equity up into a business hp agreement (not personal as per my previous agreement). I signed this unaware that this was a different contract and that I effectively signed away my consumer rights. I know I should have read the contract thoroughly but I didn't and was in a rush to buy the car. Also I didn't realise that I got such a poor deal on my old car and the negative equity wrapped up in the new deal was 10k! I'm now owing the 10k and I can't settle early without paying back ALL the interest on the new agreement (18k!) as they don't recalculate interest under business contracts. Please help. I feel I've been well and truly screwed.

Not sure what you can do here. It does sound like the idea of a shiny new car may have prevented you from reading the detail of what you were signing up to.

Cant see that theres any 'fault' here, other than possibly sharp practices by the dealership that sold you the car.

Are you in a position to clear the loan or are you thinking of changing your car again?

Buzby

Haste and rush are 2 things you can never mix with financial matters. Yes, you were only interested in the end result, but as you discovered it as a price.

All new car sales go into negative equity once it leaves the showroom - this is automatic as the cash pad for car tax and VAT is immediately lost.

You may have wriggle room if the deal you have is wholly inappropriate for a consumer (eg it is VAT exempt, and should not be). You need to read up on what you signed up to and see if you can challenge it.

Rain_Shadow

Buzby wrote: »

All new car sales go into negative equity once it leaves the showroom - this is automatic as the cash pad for car tax and VAT is immediately lost.

.

New cars lose value when they are driven away and that lost value may or may not be a similar amount to those items.

But that is most certainly not why the value drops. If it was then all new cars that sold for the same price would suffer an identical drop in value as they were driven away. That is clearly not the case.

TadleyBaggie

The OP created two threads for the same issue, it is also being discussed in the "Loans" forum here: https://forums.moneysavingexpert.com/discussion/4759586

Strider590

Doesn't really help in the OPs predicament, but none of this would happen if people took the "only spend what I can afford in cash" approach to life.

I suppose it's easy for me to say?

gilbert_and_sullivan

Strider590 wrote: »

Doesn't really help in the OPs predicament, but none of this would happen if people took the "only spend what I can afford in cash" approach to life.

I suppose it's easy for me to say?

Yes maybe it is easy for us to say, maybe we had some mature people in our lives who didn't believe in living on the never never, and they helped put us right (even if we didn't know it) when we were headstrong youngsters.

Maybe we made less painful mistakes in our youth and learned not to go down that road again.

Much of this massive modern debt is the easy media led approach to the celebrity lifestyle everyone now feels entitled to, unfortunately it comes at a cost.

Don't know about you Strider but i know that paying off your mortgage and not owing a bean to anyone is a damn sight more liberating and more fun than living outside your means wondering where the next payment is coming from.

I have no answers for our OP other than to learn from this episode.

motorguy

It always bemuses me that these threads attract so many people who say they have no debts, drive cars they've bought for cash and live in mortgage free homes and who can therefore take some moral high ground on an internet forum about how "if you have to finance it you cant afford it"

Much like over on Pistonheads there is the documented phenomenon of the Powerfully Built Company Director as a much higher than average amount of posters over there say they are Porsche / Ferrari driving company directors.

I would say in both cases the reality is somewhat different to the internet persona.