Clear car finance with a loan??

marcwatt

Hi

This is my first post, so hello everyone!

I am currently trying to sell my car that I have 3 years left on the 6 year finance deal. The finance deal isn't bad at 6% and I can afford it no problem.

The problem lies with selling the car! No one will touch the car privately with finance owed on it! I have sold a car in the past with finance on it but I cleared it and had a very trusting buyer, but it was a long and slow process.

My aim is to get a loan to clear the finance which is £5k, but I'm having trouble getting accepted for any loans, with all my eligibility scores coming in at around 40%. (using the eligibility checker on the MSE site)

Why is it that getting finance is no problem but getting a loan is so difficult??

Many thanks in advance.

[Deleted User]

Because one is secured on a vehicle and the other isn't.

Gaz83

marcwatt wrote: »

Hi

This is my first post, so hello everyone!

I am currently trying to sell my car that I have 3 years left on the 6 year finance deal. The finance deal isn't bad at 6% and I can afford it no problem.

The problem lies with selling the car! No one will touch the car privately with finance owed on it! I have sold a car in the past with finance on it but I cleared it and had a very trusting buyer, but it was a long and slow process.

My aim is to get a loan to clear the finance which is £5k, but I'm having trouble getting accepted for any loans, with all my eligibility scores coming in at around 40%. (using the eligibility checker on the MSE site)

Why is it that getting finance is no problem but getting a loan is so difficult??

Many thanks in advance.

Two main reasons:

1) Car finance is secured on the car, if you default on payments the finance company can repossess the vehicle.

2) Many lenders do not like people borrowing to pay off other debts, as in their experience a large number of people who do so don't then pay off the debts - to give an example, someone owes £5,000 on finance, borrows £5,000 on a loan to pay it off, then doesn't pay it off, and then has £10,000 of debt.

poppasmurf_bewdley

If you are half way through the deal, why not terminate the agreement by returning the car to the finance company?

molerat

A six year finance deal on a car is sheer madness !

foxy-stoat

Get a settlement figure in writeing and advertise the car with outstanding finance, be upfront.

They buyer can clear the finance over the phone and give you the balance in cash, if your finance company are reasonable they will be able to take a card payment over the phone and send an email to both of you confirming their interest in the vehicle is over.

tidds

Or, if you declare to the potential buyers that you have finance and as long as the sale price covers the settlement figure you could get them to pay off your finance directly to the finance house with any balance to you / you paying the balance.

Super_Whiskey

Gaz83 wrote: »

Two main reasons:

1) Car finance is secured on the car, if you default on payments the finance company can repossess the vehicle.

2) Many lenders do not like people borrowing to pay off other debts, as in their experience a large number of people who do so don't then pay off the debts - to give an example, someone owes £5,000 on finance, borrows £5,000 on a loan to pay it off, then doesn't pay it off, and then has £10,000 of debt.

Surely lenders would love people who consolidate debt? They're already open to borrowing money and if the lender gives them said money, they'll look postively on that. If the borrower doesn't spend the money on what they told the lender they would, that's fraud and they're stuffed.

marcwatt

Firstly thanks everyone for the replies!

I don't wish to return the car as it will affect my credit rating, I can afford the payments, I just need a bigger car and the trade in prices I am getting are ridiculous!

From your comments its clear that the finance isn't an issue as they will seize the asset, in other words they have insurance there if for whatever reason you don't repay. But with the loan its a whole other ball game.

I had been upfront about the finance and have my settlement figure in writing to show that its all above board, but people are so sceptical these days and I suppose rightly so with the things that go on now.

I have the car advertised at the settlement price, and when comparing it to other cars of the same make, model, year, miles etc. its works out cheaper than most!

They just want to simply hand the cash over and enjoy their car once you start talking about card payments and finance etc. they will simply move on to the next one.

Think its just a case of keeping it up for sale and give it more time and if not unfortunately trade in and take the loss!

poppasmurf_bewdley

marcwatt wrote: »

Firstly thanks everyone for the replies!

I don't wish to return the car as it will affect my credit rating, I can afford the payments, I just need a bigger car and the trade in prices I am getting are ridiculous!

From your comments its clear that the finance isn't an issue as they will seize the asset, in other words they have insurance there if for whatever reason you don't repay. But with the loan its a whole other ball game.

I had been upfront about the finance and have my settlement figure in writing to show that its all above board, but people are so sceptical these days and I suppose rightly so with the things that go on now.

I have the car advertised at the settlement price, and when comparing it to other cars of the same make, model, year, miles etc. its works out cheaper than most!

They just want to simply hand the cash over and enjoy their car once you start talking about card payments and finance etc. they will simply move on to the next one.

Think its just a case of keeping it up for sale and give it more time and if not unfortunately trade in and take the loss!

Returning the car will not affect your credit rating.

All you are doing is using a method to end the agreement which is given to you by law.

The worst that can happen is that your current loan company may not give you another loan for at least six years.

Why go through all the hassle when one simple action can solve all your problems.

k3lvc

marcwatt wrote: »

Firstly thanks everyone for the replies!

I don't wish to return the car as it will affect my credit rating, I can afford the payments, I just need a bigger car and the trade in prices I am getting are ridiculous! What sort of finance agreement do you have ? Have you read up the termination policies (i.e. Voluntary Termination once 50% of payments have been made)

From your comments its clear that the finance isn't an issue as they will seize the asset, in other words they have insurance there if for whatever reason you don't repay. But with the loan its a whole other ball game.

I had been upfront about the finance and have my settlement figure in writing to show that its all above board, but people are so sceptical these days and I suppose rightly so with the things that go on now.

I have the car advertised at the settlement price, and when comparing it to other cars of the same make, model, year, miles etc. its works out cheaper than most!

They just want to simply hand the cash over and enjoy their car once you start talking about card payments and finance etc. they will simply move on to the next one. You/they are making this more difficult than it needs to be - as long as you carry out the transaction within the phone opening hours of bank and finance company you should be able to manage it very simply. Even if they pay you cash then do the handover at the bank, pay it in and immediately transfer or make a card payment from your account to finance company

Think its just a case of keeping it up for sale and give it more time and if not unfortunately trade in and take the loss!

This is an everyday (non) issue for people - what sort of value are we talking about ?