Finance

Robbiexs · 14 July 2020 at 3:14PM

HI, i have a vehicle on finance, 11 year old Ford worth £500. I have 12 months left to run owing £1302. The Turbo has blown costing about £8/900 to repair. The finance company say i can either, pay the full sum due and the car is mine, do a 'handback' where i have to pay £624 + any charges. or a voluntary termination where as i am over the half term there will be no money to pay but may have 'charges.' The charge i believe will be a bust engine.

Am i expected to pay for the repair of the vehicle as the car is only worth £500 and the repair may be double and when they re-sell the car it won't fetch that much as it is 11 years old. I had £4000 on finance and have paid back £5847.84 the remaining £1302 is interest.
Thanks Rob

foxy-stoat · 14 July 2020 at 3:40PM

I would clear the finance and advertise it as spares or repairs, and buy something else or paying the finance and pay for the repair and keep driving it till something else breaks and re-assess.

DrEskimo · 14 July 2020 at 3:43PM

You will have to pay for the repair if you want to hand the car back. It has to be returned in reasonable condition! What's the difference between the 'handback’ and VT? Where has this £624 figure come from?

You could chose to settle the finance now and then just scrap it. How much would it be to settle the finance today?

Your understanding of the loan isn't quite right either. Your monthly payment includes some capital repayment and some interest repayment. This changes each month as the capital reduces. The £1302 remaining isn't all interest, it's going to be predominately made up of the £4,000 capital you borrowed.

Robbiexs · 14 July 2020 at 3:44PM

Thanks, the car is only worth £500 at trade value, would i not be better to terminate and when they create the charge for fixing it, offer them the trade value? Would they want the full £8/900 for the repair?

bazzyb · 14 July 2020 at 3:51PM

Robbiexs said:

Would they want the full £8/900 for the repair?

Yes, or possibly more than this as it will be at the cost of whoever they use for repairs rather than the independent quotes you’ve had.

Voluntary Termination looks likely to work out the most expensive option by far from what you have posted, but ask for a settlement figure to see what exactly it will cost to pay the agreement in full.

DrEskimo · 14 July 2020 at 3:53PM

No, the car has to be returned in a reasonable condition. A car with a blown turbo is not reasonable condition. Therefore you will have to pay to get it into a reasonable condition.

You could chance it to see how much they would charge to fix the car, but that may be more than the £800/900? I don't know if they would even accept it though.

Robbiexs · 14 July 2020 at 3:59PM

Thanks all, the settlement figure is £1302.98. I called them and they gave me three options after i told them what had happened;
1, V Termination, no money as 4 years into 5 year agreement, but + any incurred 'charges,'
2, Handback the car at £624.27 + any 'charges.'
3, pay the settlement figure of £1302.98

DrEskimo · 14 July 2020 at 4:02PM

I really don't understand the difference between 1 and 2. They are the same thing, but one charges you £600 extra? What is that for?

So £1302 is the settlement, not the remaining balance? What was the finance for the £4000 loan? APR and term?

Robbiexs · 14 July 2020 at 4:17PM

Hi DrEskimo, sorry I don't have those details with me but i have a remaining balance of £1340.02 and i am sure she said to pay £1302.98 to clear the account. i will have to check and come back to you.

DrEskimo · 14 July 2020 at 4:36PM

Robbiexs said:

Hi DrEskimo, sorry I don't have those details with me but i have a remaining balance of £1340.02 and i am sure she said to pay £1302.98 to clear the account. i will have to check and come back to you.

That's OK, I think I've worked it out from the info in your posts! If you've paid £5847.84 so far and you're 4yrs into a 5yr agreement, then you are paying £121.83/month? In which case, your APR is around 30%. The settlement of ~£1300 sounds about right.

The way I see it, is you could pay for the £900 repair and then VT it and hope you don't get lumped with any other wear and tear charges, and then buy another car.
Or you could pay the £1,302 settlement and then either scrap it and buy another car, or repair it and keep driving it.

Any way you look at it you are looking at around ~£2,000 to either keep this car running, or getting rid and getting another car.
If you are fairly confident the car is in good condition and won't have other charges, and you could get the work done even cheaper...VT might be the best option...?

benbay001 · 14 July 2020 at 11:56PM

The cheapest 11 year old diesel (you said turbo) ford on auto trader is a 300,000 mile mondeo for £800. Id suggest you have vastly under valued your car. (Once its working again)