Large car finance - New Circumstances

danny1990

Hi, thank you for taking the time to read my post.
Summary
In April 2019 I purchased a a car for £25,000 (and £25,000 of finance) I've never really been a fan of giving money towards cars, although it is probably unwise. I wanted to get the fast car/big engine out of my system and intended to keep the car until the half-way point which would be in another 1.5 years then hand it back.
The car is quite expensive to insure, service, fuel etc.. However, I've not had any difficulty with the repayments. This is not to say I'm rolling in cash, it's quite the opposite.

Changes to circumstances
It's looking pretty likely that I will be promoted in my company within the next month or two, although this is a promotion I will be dropping my annual income by around 20-30% if I accept it. The positives to doing so, I will get to work local to my residence rather than working away from home. With a young family, this is very appealing. I will also reduce the hours I work by roughly 50%. The benefits option comes with a company car, which they expect you to take over the cash equivalence, and with my current fuel consumption, it would also be wise to take it.

This is where I'm looking for advice. If  all does go as expected and I take the company car, I don't want to have a very expensive toy sat on the drive depreciating away, along with the reduced income. Now, as I purchased the car 100% on finance, it's worth less than what I likely owe. My current balance on the car ( including interest ) is £25,000 funnily enough, although I'd imagine a settlement figure would reduce that by £4-5,000 *uninformed assumption. The current part-ex value I've managed to find on the internet is £17,500. Leaving me short. I do also own another car out-right that my Mrs drives, although it would be lucky to fetch £500 with the amount of miles she's put onto it.  I also cannot sell the car privately due to the asset belonging to the finance company, I wouldn't have the cash to put "on-top" to cover the rest of the finance.

The ideal scenario would be to part-exchange the car, along with my fully owned car ( which won't make a dent, I know ) and get another, more practical vehicle for her to drive whilst I take the company car. I imagine my options would include taking on more finance than the asset is worth, which most lenders try to avoid. I don't have much in cash to put down against it, as I am at a point in my life where I'm trying to make changes to my financial attitude.

Any help is much appreciated, I hope I've provided enough information for someone to point me in the right direction.

tl;dr? Outstanding car finance between £21-23,000 - soon to be getting a company car and want to get rid of the money pit against a £17,500 part-ex valuation.

DrEskimo

Get an accurate settlement figure. Its usually an automated service. 

Then get a number of trade in quotes to just buy the car from you. These will vary widely so ring around a lot of dealers, garage and online brokers. 

Once you have an accurate picture of the two you can get an idea of your options. 

You need to change your irrational belief that you should only buy cars with finance. Its illogical. All it does is add additional costs on top of the usual car running costs in the form of interest. As you've also just found out, it puts you at financial risk too if you finance too much, as the car depreciates quicker than you are paying it off. 

db2016

what car is it? you mention fast car big engine?
depending on what it is, i have a couple of ideas to help

danny1990

db2016 said:

what car is it? you mention fast car big engine?
depending on what it is, i have a couple of ideas to help

I have private messaged you.

jeepjunkie said:

Priorities are all wrong here. Life is always changing so taking on huge financial commitments with a young family is unthinkable to me. The best thing is to stick to the original plan with the car unless you can find a buyer that covers the outstanding finance. Further, as you will find out, as kids grow so will their costs so taking such a large pay cut is madness unless say you expect a sequence of big rises? You can’t fix debt with debt.

I appreciate what you are saying. Although, the car choice was after my Mrs started working once the kids started school and had extra income which more than covered the car. Although, it would have been better saved. The pay cut is still a relatively good wage. I won't have to work away from home for 10 of the 12 months a year which to me seems worthwhile. Any ideas on how I can get rid of the asset now against the debt once I receive a company car. Opposed to sticking with the car which will be under a sheet for the next year and a half until I can do a hand-back and/or sell if it has appreciated.

enthusiasticsaver

You are stuck between a rock and a hard place here due to taking the whole car on finance meaning it was inevitable to be in negative equity on it due to high depreciation on new cars. Expensive lesson to learn. You need a trade in price on it initially as that £17500 may be optimistic then if your credit is good I would get an 0% unsecured money transfer card for the shortfall to clear the outstanding finance. Or you will have to SORN it for the next 18 months. I am amazed your wife agreed to using the surplus from her returning to work on a fast expensive white elephant of a  car. Maybe she should drive it until you have to hand it back? 

db2016

danny1990 said:

db2016 said:

what car is it? you mention fast car big engine?
depending on what it is, i have a couple of ideas to help

I have private messaged you.

replied.