Best thing to do with negative equity

bigjl

OP

You have no other option than to continue paying till you are no longer in Negative Equity.

There is no short cut other than paying it off.

Also buying a car retail, then selling it at a loss to get into another retail priced car which will then also have negative equity for several years is a quick way to financial ruin.

And the reason people might give you advice like this is due to the simple fact that many people do exactly as you are trying to do when they were young and foolish.

I did it, most of my friends did it.

If you are trading in without putting any money down and relying on your old car as full deposit then even if you can get the Finance Company to sign off on it you will be paying extra interest on the shortfall when it is included in the next loan.

Unless you need the car to earn a living or due to a change in circumstance were your current car is no longer suitable, such as you have a small Coupe and now need to be able to transport a disabled relative on a regular basis and need something with easier entry and exit. Then your need is more time critical.

If you just want the latest model or a different colour etc then hold off for a year or so, you have already taken a big depreciation hit and the difference between now and 12mths time is not going to be huge.

aeroblade

Can't the OP do a balance transfer on 1 year interest free credit card?

gilbert_and_sullivan

In desirable parts of the country there are roads/hamlets that are stupendously expensive to live in, they are inhabited by people who make shed loads of money from those people who will never live there, because those other people are paying massive interest payments for most of their lives (by doing exactly this and worse) to keep the former in permanent luxury/racehorses/expensive wives.

motorguy

facade wrote: »

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.

Provided its not a PCP deal, then yes, thats an option in roughly a years time.

PCP deals tend to be 3+ years before you're @ 50% in a four year deal

motorguy

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.

Theres no way to get rid of the negative equity at this point - other than to pay it in some form. Thats either from savings, a 0% card transfer or try to roll it into another deal.

What has changed for you over the past year that you "must" change your car now? What car is it by the way?

Ectophile

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.

Because this is the MoneySavingExpert forums, not the GettingYourselfEverDeeperIntoDebt forums.

There's a lot of us who aren't impressed just because you drive around in a flash car.

motorguy

aeroblade wrote: »

We live in a society where perception and creating good first impressions means a lot.

And that requires a brand new car every year does it?

motorguy

It does actually bring up an interesting point though - most of these PCP / finance deals on offer really do require you to be able to commit to the full term or close to it, otherwise they can be very expensive.

Joe_Horner

aeroblade wrote: »

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

Except that the whole sub-prime mortgage / banking crisis / worldwide recession thing that's made stuff so hard for the past several years was caused by people wanting to, and being allowed to, borrow more than they could afford.

Since that affected (and still is affecting - "austerity" anyone?) all of us pretty badly in one way or another, yes we DO have a right to judge people who still want to live by that attitude.

IamNotAllowedToUseMyName

Just be clear, the OP hasn't got anything he should not have expected. He hasn't really got negative equity, he bought something that does not depreciate in a straight line on a plan that gave him more than he could afford outright, but over the plan should have been affordable. He now wants to ignore the fact that he signed up to a plan to pay it off over several years, ignoring the advantage he had of a new car, because he is hankering after another new car and wondering who will magically give him money for something he hasn't paid for yet yet has had the benefit of.

Remember real negative equity is owning something that you are stuck with, cannot afford to sell, with no prospect of a solution. The solution here is to have a bit of maturity and recognise that you can't have everything you want now - a bit of patience is the solution.