Car Finance

Lhoome

Hi
Am looking for advice from finance stars!
I am currently in a car finance agreement which comes to the end of its term in May.
Its a bubble contract so I have the option to trade in for new car from dealer, pay off the remaining finance or just give the car back.
The car is a diesel and probably worth approx £8000. I will need to pay approx £8,500 for the final settlement plus I am over my miles so an approx mileage penalty of £600.

What I need advice on is - pay off the remaining and just keep the car or trade it in and use the money I would have use to pay off the remaining to invest in new car? My worry is that it is a diesel and there are such bad reports about them I wonder if I keep it and then it goes to scrapage in a couple of years? I will not have to pay the monthly payment of approx £230 a month at the mo. If I get a new car I will want the same car as don't want to change cars

Any advice welcome!

flashg67

I know diesel sales are down but there's still millions sold worldwide so I can't see there being a problem in the next few years.
The excess mileage will only be charged if you hand the car back, although the car will be valued slightly less in a sale because of the mileage.

If you're buying a new car. sometimes the incentives from a manufacturer can offset the negative equity so worth checking out.

System

The bad reports are being done by idiots and it is going to cause issues with climate change given CO2 is the worst contributor and petrol cars spew out far more of that than diesels do as well as using more fuel to travel a mile meaning more fossil fuels burned to move the vehicle.

Diesel cars when bought to be used for the right purpose, i.e not short journeys around town, are far better for the environment than petrol cars are.

parking_question_chap

Tarambor wrote: »

The bad reports are being done by idiots and it is going to cause issues with climate change given CO2 is the worst contributor .

Climate change causes increased CO2, not the other way around.

AnotherJoe

Do you need to “invest” (of course it’s no such thing) in a new car right now ?

You’ve paid for the depreciation already, in a few years you may get a great deal on it via scrappage, you won’t have to pay the excess mileage fee, you can run it for next to nothing for a year or three, in the meantime save the monthly payments in a high interest regular saver ready for when you do buy a new(er) car.

Bigphil1474

Diesels are getting a bad press because of their NOx and particle emissions - nothing to do with CO2 or climate change, it's about air quality at a local level. There is also a perception that some of the clean air zones will mean diesel drivers will have to pay extra to drive around the city etc. but it certainly won't apply to private diesel vehicles in the city I live in - commercial vehicles only.
OP, do the maths and you'll have a good idea which is cheapest option. Is the value of the car what they have said or your estimate - could have gone up or down. Assuming it's about a 3 year old car - if you keep it you will have to cover any costs that may or may not have been previously covered - servicing, repairs, tyres etc. Once it is over 3 years old, you'll need to MOT it. What's the road tax cost. If it's cheaper to maintain your current car with all those potential costs, than to pay a monthly payment, then if it was me I'd keep it. At least you know it has been a looked after car. £8k for a 3 year old car could be a bargain - depends on the car. If your heart is set on a new car, then that's not necessarily a financial decision - you may be stretching a point to call it an investment though. Good luck.

marlot

Lhoome wrote: »

... I will need to pay approx £8,500 for the final settlement plus I am over my miles so an approx mileage penalty of £600....

You only need to pay the mileage penalty if you're handing it back.

If the car is working well, it may well be worth buying.

IanMSpencer

marlot wrote: »

You only need to pay the mileage penalty if you're handing it back.

If the car is working well, it may well be worth buying.

It depends what that £8k valuation is based on. Is it an optimistic showroom valuation or a trade valuation.

With the mileage charge you are comparing balloon payment vs (realistic valuation + mileage charge). (i.e. the higher the mileage charge, then keeping the car is actually more attractive because of the costs of termination increase, though obviously the valuation may also change with that increasing mileage).

If the realistic valuation is larger than the payment then it is worth keeping financially, otherwise the OP is paying more than is sensible for the privilege of keeping the car - in principle they could terminate and buy an identical car for less money. There are clearly other issues, such as the value of warranty remaining, wear and tear to be factored in, but those costs will most likely be far less than getting a new deposit together and starting around again for an identical car.