Best thing to do with negative equity

Aobrian

Hi, I'm looking for any advice or help here at all.

I'm looking at buying a new car. The problem being my current cars worth is around £2500 less than my settlement figure. My current car was taken out over 4 years and I am 1 year into the agreement so I take it simply handing it back to the finance company is not an option yet.
Is there any way at all of getting rid of this £2500 negative equity and effectively starting again? The car I am looking at buying is simply too expensive with the negative equity added on.

Thanks for any help.

facade

The simplest is to put off buying the new car for a year or so, until you have paid enough on the present one to VT it.

That way you get 12 months use of the car and remove the negative equity.

wba31

Aobrian wrote: »

Hi, I'm looking for any advice or help here at all.

I'm looking at buying a new car. The problem being my current cars worth is around £2500 less than my settlement figure. My current car was taken out over 4 years and I am 1 year into the agreement so I take it simply handing it back to the finance company is not an option yet.
Is there any way at all of getting rid of this £2500 negative equity and effectively starting again? The car I am looking at buying is simply too expensive with the negative equity added on.

Thanks for any help.

Don't buy the new car..?

One you hand the car back the finance company will want you to repay the deficit. If you cannot afford to repay this and buy the new car then the simplest MSE thing to do is not to buy the new car.

Only other thing is can you not take out the finance on the new car to coverthe finance shortfall from this car? you will end up paying interest on the shortfall. But what happens in 1-2 years if you then want to change cars again?

marlot

Aobrian wrote: »

The problem being my current cars worth is around £2500 less than my settlement figure..

You could ask the Germans to refinance it at a level well over your monthly wage, with you paying it off for a very long time - 40 years maybe? Oh wait, that isn't working that well for Greece!

Getting serious, if you can't afford to settle the outstanding finance then you:
Keep the current car (at least for now)
Sell it privately (might get a bit more for it)
Buy a less expensive new car
or
find some savings somewhere else so you can afford to repay

The sensible longterm strategy is to take out finance more aligned with how long you want to keep the car. Or lease.

Personally I buy cars new or nearly new and run them for 8-15 years.

forgotmyname

Your in negative equity on a car, you cannot afford to clear the difference and you want to make the same mistake again, and so soon?

SilverSaloon

this post reflects typical "living beyond your means".

if you cant even afford your current car, then for heavens-sake, dont buy another one!

keep the car you have, or save up and clear the offset, then sell.

Herzlos

Or trade it in for a much cheaper one and take the £2500 hit.

aeroblade

Why is everyone being so harsh to the OP? If the OP wishes to replace his/her old car with a brand new one then its up to them. We live in a society where perception and creating good first impressions means a lot.

bigjl

aeroblade wrote: »

Why is everyone being so harsh to the OP? If the OP wishes to replace his/her old car with a brand new one then its up to them. We live in a society where perception and creating good first impressions means a lot.

Really?

I think you have a strange outlook on life or you still live with your parents.

aeroblade

I never said that living in such a society is a good thing or that I think purchasing a brand new car is a good idea. Personally if I was in the OP's position I wouldn't have even financed car in the first place and would have bought a £1000 or so older car. That said, I don't care what others think but if the OP does then fair enough it is up to them whether they want to re-finance a new plush car or not and we have no right to judge

aeroblade

OP how much will you currently pay for your existing car and how much more will the newer car be per month? Do you need a bigger car or just fancy a more posh one?