Santander Voluntary Termination - good idea?

michaeld17

Good evening all,

Can you please help me out. This has been recommended by a friend but I wanted to double check a few things.

I brought a new car from Vauxhall, Hire Purchase so 0% interest over 5 years. I’ve paid off just under 3 years so more than half. I’ve been chasing the depreciation for a while and it currently stands at a 3500 deficit (if I was to sell the car for 5300 offered by Vauxhall part ex). I’m going to buy a new car at the end of January, second hand an on a different finance package and different company.

To save having the add the 3500 deficit onto the new finance package, I was going to apply for voluntary termination.

I have a few questions which I am keen to know before proceeding.

1. My dad is currently the guarantor and would like to know if this will impact him in any way
2. I’m building my credit score currently, so although it won’t appear, can Santander still add notes and do they?
3. Is there any fall back such as not being able to immediatly obtain a new finance package from another company

Any advice would be very much appreciated.

Many thanks,
Michael.

flashg67

It's years since I did a VT and can't comment on Santander in particular but I was told it would not affect my credit rating & I had no problem getting a new HP on a new car shortly after.
I can't see any problems with the guarantor - he's only a back up after all. Perhaps need to confirm his liability is also removed when the car is VT'd?

bigjl

You have two years to go and your car will be freehold.

It makes no financial sense to get rid of a car that is nearly paid for and buy a cheaper but unknown car and then pay a big lump of interest on that.

Will you even be better off monthly?

Are you sure of your resale value?

Or did you go into a dealer and ask for a price?

michaeld17

bigjl wrote: »

You have two years to go and your car will be freehold.

It makes no financial sense to get rid of a car that is nearly paid for and buy a cheaper but unknown car and then pay a big lump of interest on that.

Will you even be better off monthly?

Are you sure of your resale value?

Or did you go into a dealer and ask for a price?

The issue which I've had is for 2 years, I was making 2 120 mile trips every week which has meant the car has 80,000 miles on it. The warranty only lasts for 100,000 which I don't want to go over as I'm paying monthly and running the risk of something expensive going wrong.

From all my calculations, I'm never going to be at a point of positive equity, hence the recommendation for the VT.

Plus the offer which I've had from the dealer is for a much better model and works out only being a few quid extra.

Mercdriver

michaeld17 wrote: »

The issue which I've had is for 2 years, I was making 2 120 mile trips every week which has meant the car has 80,000 miles on it. The warranty only lasts for 100,000 which I don't want to go over as I'm paying monthly and running the risk of something expensive going wrong.

From all my calculations, I'm never going to be at a point of positive equity, hence the recommendation for the VT.

Plus the offer which I've had from the dealer is for a much better model and works out only being a few quid extra.

Strictly, you won't be in a position of positive equity as you already can't get enough for the car to pay off what you owe. You have simply paid more than half of the amount borrowed which isn't the same thing.

I understand your nerves on going outside the manufacturer's warranty, but are your fears 'warranted' (sorry, bad pun)? have you serviced the car regularly and on time? If so, then your risk is minimised. Could you extend the warranty for enough miles to cover you til the end of the 5 years? This will likely be cheaper than buying a car that isn't the devil you know and rolling in the remainder of the finance or losing out on the residual value of the car at end of term.

bigjl

michaeld17 wrote: »

The issue which I've had is for 2 years, I was making 2 120 mile trips every week which has meant the car has 80,000 miles on it. The warranty only lasts for 100,000 which I don't want to go over as I'm paying monthly and running the risk of something expensive going wrong.

From all my calculations, I'm never going to be at a point of positive equity, hence the recommendation for the VT.

Plus the offer which I've had from the dealer is for a much better model and works out only being a few quid extra.

So you have done huge miles in 3 years.

Selling a car that is almost paid for due to the warranty having a 100k limit and nothing else is not something I would do.

If the car is well maintained, from the 5yr warranty I assume maybe a Hyundai, then I would still stick with what I know.

Your current car is a known quantity.

I would look into the T&C of the HP as I have never VT'd a car that has done huge mileage in 3yrr.

I did give my Jaguar back for the Finance Co to dispose of and settle the outstanding loan but that was a business to business loan and I don't think VT was part of the deal. But in my case the equity was in the car so it worked out easier for me than dealing with tyre kickers.

At the end of the day you seem to be quite young, early 20's maybe?

I suspect everybody here has been in a similar situation when they wanted a new car (or new to them car) but changing will always cost you money.

The new loan won't be interest free for a start.

I never owned a car with a proper warranty till 1999 when I Bought my first brand new car.

When my Subaru Legacy was stolen in 2008 it was fully paid for having been bought new in 2004, the warranty had ran out at 3 yrs, the car was a known quantity and had only had a few little niggles in the first few months and two lower wishbones bushes just before 3yrs old.

The point is the car was just as reliable outside of warranty, apart from the issues under warranty it was completely reliable and I would not have considered selling for at least 3 or 4 years of it hadn't been knicked.

It is your decision hit as Inhave said already changing cars will always cost you money in some way unless you buy for less than you sell, which you are not doing.

I can't understand how you are not in positive equity as 0% interest deals usually have a decent deposit involved.

And every payment reduces the balance.

You should be at least in the green after four years even with your miles as your car should be worth more than 2k

Depreciation tails off after 2/3 years which is why many MSE members buy then.

Mercdriver

bigjl wrote: »

So you have done huge miles in 3 years.

Selling a car that is almost paid for due to the warranty having a 100k limit and nothing else is not something I would do.

If the car is well maintained, from the 5yr warranty I assume maybe a Hyundai, then I would still stick with what I know.

Your current car is a known quantity.

I would look into the T&C of the HP as I have never VT'd a car that has done huge mileage in 3yrr.

I did give my Jaguar back for the Finance Co to dispose of and settle the outstanding loan but that was a business to business loan and I don't think VT was part of the deal. But in my case the equity was in the car so it worked out easier for me than dealing with tyre kickers.

At the end of the day you seem to be quite young, early 20's maybe?

I suspect everybody here has been in a similar situation when they wanted a new car (or new to them car) but changing will always cost you money.

The new loan won't be interest free for a start.

I never owned a car with a proper warranty till 1999 when I Bought my first brand new car.

When my Subaru Legacy was stolen in 2008 it was fully paid for having been bought new in 2004, the warranty had ran out at 3 yrs, the car was a known quantity and had only had a few little niggles in the first few months and two lower wishbones bushes just before 3yrs old.

The point is the car was just as reliable outside of warranty, apart from the issues under warranty it was completely reliable and I would not have considered selling for at least 3 or 4 years of it hadn't been knicked.

It is your decision hit as Inhave said already changing cars will always cost you money in some way unless you buy for less than you sell, which you are not doing.

I can't understand how you are not in positive equity as 0% interest deals usually have a decent deposit involved.

And every payment reduces the balance.

You should be at least in the green after four years even with your miles as your car should be worth more than 2k

Depreciation tails off after 2/3 years which is why many MSE members buy then.

Two things tell me it isn't a Hyundai:

1. Hyundai's have a 5 year, unlimited mileage warranty, not a 100,000 mile warranty.

2. OP says bought from Vauxhall.

Everything else, I would agree with

blackste

Hi there.
1. My dad is currently the guarantor and would like to know if this will impact him in any way
2. I’m building my credit score currently, so although it won’t appear, can Santander still add notes and do they?
3. Is there any fall back such as not being able to immediatly obtain a new finance package from another company

In regards to points 1 and 2, carrying out a voluntary termination has no negative effect on your credit score. It is you using your legal rights under legislation. It will put a grey mark on your file, which, if you are questioned about, you can explain easily.

For point 3, i carried out a VT in december with mercedes, and the same week got a new one on finance with them. It varies from company to company, and case to case though.

Something to bear in mind though if you do VT the car. While the wording of the legislation says "nothing more to pay" as long as the car is in good condition, they will more than likely persue you for the excess mileage, if you have covered 80k in 3 years. There have been some decisions supporting the finance companies in these cases recently, so be prepared to either fight hard, or pay some money.

bigjl

Mercdriver wrote: »

Two things tell me it isn't a Hyundai:

1. Hyundai's have a 5 year, unlimited mileage warranty, not a 100,000 mile warranty.

2. OP says bought from Vauxhall.

Everything else, I would agree with

The reason I thought that (the OP owns a Hyundai) was that I was looking into used Kia's and Hyundais to buy at 3yrs.

Must have missed the Vauxhall bit.

As I though 7 yrs would be better than 5 I looked into it in more detail.

But on checking the Kia website several of the later cars have warranties that are now limited to 100k miles.

The website even listed which years had unlimited miles and which had 100k.

Still 100k miles is more than enough coverage for a car that is only going to get used for going to work and shopping.

I thought Vauxhall had a lifetime warranty rather than 5 years?

Has that now stopped?

BykerSands

bigjl wrote: »

The reason I thought that (the OP owns a Hyundai) was that I was looking into used Kia's and Hyundais to buy at 3yrs.

Must have missed the Vauxhall bit.

As I though 7 yrs would be better than 5 I looked into it in more detail.

But on checking the Kia website several of the later cars have warranties that are now limited to 100k miles.

The website even listed which years had unlimited miles and which had 100k.

Still 100k miles is more than enough coverage for a car that is only going to get used for going to work and shopping.

I thought Vauxhall had a lifetime warranty rather than 5 years?

Has that now stopped?

Yes, as of January last year.

Shack_attack

I VT'd my Astra 3 years ago with Santander and it hasn't affected me obtaining credit.

RE giving the car back, if you have a mileage allowance they will pro rata this to the date you give the car back and charge you for each mile you go over. This can be quite expensive if say you've done 50000 miles more and it's 5p per mile.....