Help with negative car equity!

misswhodoo

I’ve got myself into a bit of a pickle with my car. I purchased it brand new last April as my job required a lot of driving and my employer provided me with a car allowance. I am now changing jobs and will no longer receive a car allowance. Ideally I would like to get rid of my car as I will no longer need it for work, but I would still need a cheap run around. I would look to get something with payments for around £150 a month, and then I could just get the train into work (commute 3 days per week, work from home 2 days per week). Unfortunately my negative equity in my car is leaving me with a £6,000 gap as my car is only work £10,000 now and my outstanding loan is £16,000.

At present I am thinking I will have to stick with the car until I can clear the negative equity and then pretty much hand it back. Does anyone else have any better ideas? Is there anyway I could get rid of it now? Any advice would be most appreciated!!

Current car payment £350 per month
Outstanding loan £16,000
Car value £10,000
Cost to drive to work per day (current petrol costs) £8 x 3 days per week
Cost to get train per day £12.50 x 3 days x 3 days per week

lincroft1710

Keep car until it is 2 years old and use it for your commute. "2nd year's depreciation is a lot less than 1st year.

Herzlos

Where did you get the cars value?
You can try and sell it privately for more than £10,000, or even see what webuyanycar.com will pay you.

If it's cheaper to drive to work you're probably better just doing that as you're going to end up at least about £8k in a hole by the time you've downgraded (£6k from equity, £2k on a new car).

Is it an HP or a PCP?

misswhodoo

Thanks very much for feedback.

I took out finance with the dealership, so don't know if that's HP or PHP!?

marlot

misswhodoo wrote: »

Thanks very much for feedback.

I took out finance with the dealership, so don't know if that's HP or PHP!?

Time to get the paperwork out then!

pd52

Did you have outstanding finance that you rolled in to a new package when you bought the new car?

xHannahx

Is the outstanding balance a settlement figure?

I've noticed car finance companies like to put the amount outstanding to include interest for the whole term, but if a settlement figure is obtained that is removed and can be a lot lower than balance,as only pay the interest to settlement date.

jerrynbbt

Okay I can probably help you out with this.

If you purchased the car from a motor dealer it is more than likely you have a HP (hire purchase) agreement. This is GOOD news.

One of the benefits of a Hire Purchase agreement over say a personal loan is that you have certain rights as a consumer designed to protect you.

One of these is a "Termination Right". If you look at your documents you should find this figure stated somewhere on the document.

Basically this figure is the minimum amount that has to be paid for you to walk away from the vehicle. 50% of the total amount payable.

So lets say you have 16k outstanding and the car is only worth 10k you are in 6k negative equity.

But..... you might be able to terminate and reduce the negative equity.

Simply take the deposit figure you paid when you bought the car, + the amount of £350 payments you have made and this is what you have paid for the car so far.

Take this figure from the "termination" figure and what left is what you would have to pay to walk away from the car and own nothing.

If this figure is less than £6k you are better off going this route if you need to get the car gone.

If you are going to go the selling route or if the figure is more to terminate then you are certainly going to need to sell privately to get the best figure I would think, obviously without the full vehicle details I cannnot say how desireable the vehicle is in the market place and what you can expect to get.

I certainly wouldnt waste too much time with the likes of webuyanycar, if you need a quick sale stick it on an eBay auction with a sensible reserve or list it on dealerbid this will send the details to lots of different dealers who will simply tell you how much they will pay to buy it from you.

I am a buyer on the site myself and it is very rare we are beaten on price by the usual car buying companies but it will depend on what vehicle you have. If you can pop the details on here I should be able to help you out a little bit better with what to expect to get for it whichever route you decide to take.

Need anything clarifying just drop me a reply.
Hope everything works out for you. ;-)

bigjl

45 payments left so it was either April this year over 51months.

Or 45 payments left and the deal was over 63months.

A settlement figure is usually less than the outstanding payments so to be honest the figure don't really add up.

If you have £16k left in payments then I would expect the settlement to be a couple of thousand less.

Though how somebody can buy a car and not know if they signed a HP or PCP is a little bit hard to believe

jerrynbbt

Hmmm where did you get the 45 months from?

I cant see any figures just £350 per month ?

Probably my eye sight I'm not getting any younger :-)

AdrianC

jerrynbbt wrote: »

Hmmm where did you get the 45 months from?

I cant see any figures just £350 per month ?

Outstanding loan £16k, £350/mo payments.
£16,000/£350 = 45.7 months. Call it 46 months, and the outstanding is a tidge over £16k.
So if the loan was taken out April 14 ("last April"), then that's a 64mo - 5yr 4mo - loan. If it's April 15, then that's a 52mo loan - 4yr 4mo. Both slightly durations, but there we go.

Given those figures, I'm wondering if it's actually a 3yr PCP with a balloon included in the £16k figure.

Either way - it's a long-standing financial commitment, and thought should have been given to how it might be exited if necessary.