HP to clear or not to clear!

sunkenoctober

Hi All,

I'm looking for some financial advice, I'm looking to refinance two of my loans (totaling £6,500) into one loan. As the APR is a lot lower than my current loans.

However, I also have a HP car loan which I'm not sure if I should pay this off with the new loan, there is only £3k left on this HP loan.

If I were to buy another car, I could use the actual car worth against the asking price, instead of arranging the dealer to clear the finance.

I'm looking into getting a new car soon and didn't know if this would be worth doing or if I should leave the HP finance until I trade my car in for a new one!

The loan I'm looking at getting is flexible, so I'm hoping to over pay.

Thanks for your advice!

Daveahare99

Hi There

I gather form what you are saying you are thinking of getting the new car from the same dealer?

At the moment car dealers have a massive surplus of used stock. It depends on where you go but many at the moment arent giving true valuations for what the car is worth. They give a court/showroom price (what they value the car at if they sell it at their dealership) or a BCA price ( British car auctions price. The likely value at auction which is considerably less).

If it was me I wouldn't trust car dealers at the moment to clear finance and repackage that into another car. You will likely loose out as diesel and petrol cars will devalue considerably over the next couple of years.

I know its only 3k but if it was me I would clear this from a personal loan as long as the APR was good. Then if I really wanted a new car I would look to sell my old privately. Can take time of course depends if you want the hassle.

Thanks

System

You have basically £10,000 of debt between the two loans and the car loan. Do you really need to be getting a new car with that level of debt? Keep the car you've got, pay it off, use the extra freed up monthly cash to pay off the £6500 of debt and get some money behind you instead of digging yourself an even deeper hole by taking on even more finance. Your future self will thank you for it.