Anything I can possibly do?

JayLeeMillar

Hi folks,

Seeking a bit of advice on a money matter (bit of a long story, so be prepared!)

A year ago I purchased a car brand new out the showroom, but before I could sign the papers on the car there was the issue of finance. Basically, because of my age & the value of the car, I was declined by a few finance companys. However, one finance company agreed on the condition I put down a £10,000 deposit. The only place I could get this of course was through the bank.

So basically I'm paying alot of money for this car. The money wasn't an issue before & cars have always been my thing so I didn't mind, but I'm at that stage in my life where I want to be moving out of my fathers house putting money aside for a house of my own, I've also recently become a godfather so I'd like to put more aside a month than I do for my god child.

I got the car on 0% interest (bit of a no brainer paying a huge deposit, but had no other choice) If the car had been second hand, I'd have been paying a 7% interest fee.

My query is this, would it be possible to sell the car back to the dealer (getting my bank loan back & paying it off - only £8500 odd left to pay) & whatever I have been given for the car, use as a deposit to purchase the car back plus pay the 7% interest fee on a new finance plan?

Or is there an alternative option (beside parting with the car)

Many thanks in advance
Jay

Tixy

You may be able to sell the car back to the dealer. How much they would give you and whether that amount would cover would give you would be enough to cover both the outstanding car finance and the remainder of your bank car loan is another issue. You'd need to ask and find out and see if there was anything left over to then use on a deposit for another car. (I think you are suggesting repaying the bank loan you have, but maybe you intended to keep that running as well as a new finance deal)?

As to try to buy your own car back from them - well you'll obviously be paying them a higher price than they will give you, so you'll be paying them another profit.

Whether you'd then be accepted for finance on the second hand car with whatever deposit you might have and at what APR is another unknown.

I would guess if it were all possible it will mean the car costing you several thousand more over the whole term and make very little financial sense.

In terms of reducing your monthly outgoings another possible option might simply be to ask your finance provider if you can refinance/ restructure the car finance over a longer period so that you are paying less each month (if they allow this is probably would no longer be at 0% so will cost you more in the long run)

Or you could possibly ask your bank if you can refinance the loan from them so you pay off less per month but pay it off for longer (again that will cost you more in the long term).

So you need to know

1) How much do you estimate the car is worth now? and specifically how much might a dealer give you if you sell it to them.
2) how much is the settlement figure on your car finance?
3) how much is the settlement figure on your loan (and what APR would be useful as well).
4) how much would a dealer sell you car (or a very similar one) for on the forecourt?

heartbreak_star

If it was brand new you won't get anything near what you paid for it out of the dealer, especially if you've put a fair bit of mileage on it...not sure what to suggest tbf. Can you overpay the loan so it clears quicker?

HBS x

tell_it_how_it_is

I think your idea, and any other idea for keeping the car, is only going to cost you even more shedloads of cash, and wouldn't really make sense with you trying to attain money for other things.

JayLeeMillar

Thanks for getting back to me folks, appreciate the input.

Think it would make things more easier If I gave you the figures as to what I'm paying a month?

Bank Loan - £250.88 over 60 months - Not sure on Interest rate, But final payment if I let the course run, I'd be paying back round about the £15,000 mark.
Finance - £190.00 over 60 months with 0% Interest
So in total £440.88 a month (some of you may call that a mortgage!)

The reason I had suggested selling the car back to the dealer & then purchasing again was so I could pay off the bank loan off altogether. The car cost £21,000 odd so a £10,000 deposit making it £11,000 on finance. If I was to sell it back to the dealer I'd probably get about £12,000 / £13,000 for in it's current state. So if we say £12,000 for example, pay off the bank loan in full (£8500 odd) that would leave me with around £3,500 that I could use as a deposit on the car which I assume the dealer would price for around £16,000. So the new evaluation of the car plus my deposit (£3,500) which would make the total amount to pay £12,500. not forgetting the 7% on finance which would take the total to about £13,000 odd. Over a course of 60 months, I'd be paying £220 odd a month. Which is half of what I pay on the car altogether a month.

Yes I am able to pay the full amount due on my bank loan in one payent at any time

So I'd actually be saving money (If I have calculated everything right...?)

Thanks in advance
Jay

BrassicWoman

How are you paying off the current balance on the 0% finance?

JayLeeMillar

BrassicWoman wrote: »

How are you paying off the current balance on the 0% finance?

Monthly installments of £190.00 over the course of 60 months

BrassicWoman

so you'll be paying 190 + 220 on a new deal...

Tixy

If you sell the car back to the dealer you have to settle the car finance, in fact they will automatically do that - that sounds like £9120 (if you have had the deal for a year), so if you can sell for £12k then you'd be given just under £3k in cash which wouldn't be anywhere enough to settle the bank loan never mind pay a deposit back on to the car.

Bottom line is the car is worth around £12k and in total you owe maybe about £17k on it. You don't want to try selling it and rebuying to increase that to over £22k.....

JayLeeMillar

No. The £220 odd would be the new amount I'd be paying on a new finance plan. I would no longer be having to pay a bank loan of £250.88 a month. The £190 wouldn't be a factor in the new monthly cost, instead I'm hoping that by what I've stated I can pay of my bank loan, & take out a new finance plan which means having to pay an interest fee of 7%, thus making the new monthly payment of £220 odd. This is ofcourse if I am able to achieve this

Tixy

So the new evaluation of the car plus my deposit (£3,500) which would make the total amount to pay £12,500. not forgetting the 7% on finance which would take the total to about £13,000 odd. Over a course of 60 months, I'd be paying £220 odd a month. Which is half of what I pay on the car altogether a month.

And 7% APR over 5 years on £12500 is £2350 interest over the term, monthly payments being £250 (although this far from the main issue with your calculations).