Want to reduce car finance payments but. It sure what to do!

afcafc

Helllo everyone.

I currently have a car in HP and still have about 47 months to pay on it at £200 per monthS the total I owe is about 9k. We just bought a house and I'm trying to reduce out goings.

I'm not sure If I should pay off enough till I get to 50% and go for the voluntary termination and get another car on a lower finance or just stick with this. We still need a family car but I just need advice on how to save money. I have about 1k I got spare for overpayments .

If anyone could help that would be great.

Many thanks

Nearlyold

Before looking at your options you need to collect all the information you need to make an informed decision.

Ask the HP lender:-

Your current settlement figure.

If you make an overpayment will they reduce the term or the monthly payment (lenders can offer either option or both but most only offer one option)

From your HP paperwork:-

What is the total amount payable and how much will you have to have paid to VT (this will be 50% of the total amount payable).

Other info:-
What is the realistic current value of your car if you sold it? Compared to the settlement figure are you in positive or negative equity?

How much would a cheaper replacement car cost and what would be the monthly payments taking into account any positive or negative equity on your current car.

patman99

One option open to you is to find out the ettlement figure, then see if you can save money by obtaining a Bank or Building Society loan.

That way, you could keep the car and reduce payments with the option of over-paying.

I did this a few years back on a 2nd hand car. Saved £500+ on interest and the car was no longer at risk from repossesion if I missed a payment.

Herzlos

I'd go for bank loan at lower APR than the car finance (usually possible). Possibly over a longer term if you're just trying to keep the outgoings down.

With 47 months left to pay, did you just take this out over 4 years? If you're still within the 14 days of purchase you should be able to refinance without penalty.

aphill24

Borrowing 9k over 5 years with First Direct comes out at 162.88 per month. You could refinance the car this way if the saving is enough to live with. Changing a car is expensive which ever way you go and dealers are giving rock bottom prices if you part exchange.