Car Finance Woes

Mummyintrouble87

Hi everyone,

So basically I got a new car on finance January 2014, I then fell pregnant in April and had my baby girl in January. I can not return to work in September as childcare costs will be more than I earn. Once my maternity benefits stop in sept I will also not be able to afford the payments on my car.
I still have £12k to pay off on my car, but it's only worth £10k. my partner is paying all the other household bills etc so I won't need to worry about those. Just wondered if anyone has any advice on getting rid of the car.

I know ordinarily you can't hand the car back until I've paid off 50% but is this set in stone? Or could I give it back now and get a default on my credit history? I know this would affect me for a few years, but I've struggled through bad credit for years now so it doesn't really bother me.

I was going to go down the route of downsizing the car, getting one for a lot less and then adding the difference on to the new finance, but my partner pointed out that as I wouldn't be working anymore I wouldn't get finance

At a bit of a loss as what to do!

utopia_11

Read the terms and conditions of your agreement and see what the break clauses are

Herzlos

You can sell the car and clear the difference on the finance. Then find a way to purchase a new car.

If you let them take it back off you it'll hurt your credit rating and the difference will be much higher (because they've got no incentive to get a good price, it'll just go to auction).

utopia_11

I thought in some car finance agreements, you aren't allowed to sell off the car without the finance companies approval? Seeing that they are the rightful owners of the car and not the person taking out the loan.

Foxy-Stoat_3

Ask them for a settlement figure if you were to sell it after the next payment. You will have to finance the difference before you sell it.

You cannot VT before you have paid half of the prepayments and walkaway, you will be left with a shortfall.

motorguy

Herzlos wrote: »

You can sell the car and clear the difference on the finance. Then find a way to purchase a new car.

If you let them take it back off you it'll hurt your credit rating and the difference will be much higher (because they've got no incentive to get a good price, it'll just go to auction).

and they'll then pursue you for the remaining amount.

Personally, i'd find a way to pay the difference between what its worth and the finance owed and sell it.

motorguy

utopia_11 wrote: »

I thought in some car finance agreements, you aren't allowed to sell off the car without the finance companies approval? Seeing that they are the rightful owners of the car and not the person taking out the loan.

You just get the buyer to pay the finance company with you making up the difference.

Simples.

Herzlos

You should check with the finance company first, to get an OK and a settlement figure. As said, the buyer phones and pays the finance company, you pay the difference, and the buyer drives off in their new car.

Transformers

Mummyintrouble87 wrote: »

I was going to go down the route of downsizing the car, getting one for a lot less and then adding the difference on to the new finance, but my partner pointed out that as I wouldn't be working anymore I wouldn't get finance

At a bit of a loss as what to do!

Not strictly on topic but surely your 'partner' should be sharing these decisions and financial responsibilities - from you comment, it implies that he seems to see this as your problem alone.

You should ask for help on the Debt-free Wannabe board on this site:

http://forums.moneysavingexpert.com/forumdisplay.php?f=76

People might have some suggestions about cutting your living costs.

Lifes_Grand_Plan

When you say you "got a new car on finance".... do you mean you took out a loan to BUY a new car, or is it a HP / PCP / LEASE on a new car....

The advice to follow will depend on the answer to this.