Car finance negative equity

lauren58390

I stupidly part exchanged my old car for a newer model with better features. I was led to believe that adding on the remaining finance from my old car to my new deal was a good idea. I am now regretting my decision and have looked into getting rid of my car however it looks like I would only get £5000 for it but I owe £7550, a reduced settlement figure from £9000. Would the best thing for me to do is sell it for what I can get £5000 and then get a bank loan of £2550 to settle the finance ? Or is there another way I can get out of this 

jonesMUFCforever

Who will pay £5000 for it - or is that the price on we buy any car etc?
Would you qualify for a bank loan?
How would you get around - would you need to buy another car?

MinuteNoodles

Given you have no money and you'll need a car your choice is kind of limited to keeping it unless you're prepared to get something dirt cheap to run around in for a few years and can find a lender who'll lend you say £5k bearing in mind they'll take into account the existing finance you already have when doing any affordability tests.

foxy-stoat

You need to make sure that you have the difference of the actual selling price and settlement figure in your bank before the punter picks the car up.  They would need to pay the finance company over the phone the 5000 then you pay the 2550 and confirmation from the lender that you can sell it.

RelievedSheff

Just keep paying the repayments until what you owe on the car is less than what the car is worth.

Adding what you owed on the last car onto the new car was never a bright idea and you were always facing an uphill battle to get topside of the figures owed vs the cars value.

Edi81

Of course it was a good deal! Perhaps not for you but certainly for the salesperson who sold you the car and the finance.

Many years ago I worked for a car finance company and we would see this all the time - people want shiny new cars and don't see that they are signing up to perpetual debt.

Mickey666

The negative equity thing is irrelevant really.  As long as you can afford the repayments then that’s the cost of running the car. (Part of it anyway). The actual value of the car doesn’t really matter.  Cars are expensive and all they do is depreciate.

ict_guy

I have found, through experience of car finance, that the break even point is usually a good few years in to the agreement...in that, the car is no longer what’s known as ‘upside down’..... So, if you can afford the payments, you should keep the car (in my opinion), since the large part of depreciation has already happened....as time goes on, the drop in value becomes less and your car becomes more of a positive asset. Of course, if you can’t afford the payments, then you should look to get shot of the car for the best value - which is always going to be a private sale. With a finance shortfall cleared at point of sale - with an unsecured loan if you can get the credit.

RelievedSheff

This is why it is always sensible to take out car finance over as short a period as possible so that you owe less than the car is worth far sooner in the agreement.

RelievedSheff

Mickey666 said:

The negative equity thing is irrelevant really.  As long as you can afford the repayments then that’s the cost of running the car. (Part of it anyway). The actual value of the car doesn’t really matter.  Cars are expensive and all they do is depreciate.

Mickey666 said:

The negative equity thing is irrelevant really.  As long as you can afford the repayments then that’s the cost of running the car. (Part of it anyway). The actual value of the car doesn’t really matter.  Cars are expensive and all they do is depreciate.

I wouldn't be so sure that they always depreciate. We have a car that we bought for £600 in 2000 sat in the garage that is now worth around £12k.

Modern run of the mill cars granted, they will depreciate quite quickly. But not all cars.

DrEskimo

RelievedSheff said:

This is why it is always sensible to take out car finance over as short a period as possible so that you owe less than the car is worth far sooner in the agreement.

I agree. Or never borrow more than 50% of the cars original value.