Car finance debt collection 26 May 2021 at 1:15PM in Loans 6 replies 392 views

tammytammytammy

I defaulted a LOT of my car finance payments and i am now paying it off with a debt collection agency. The car keeps breaking down and I really need a new one. Can I trade in the car to a garage?   Who technically owns it? Is it still the finance company even though they've sold their debt to a debt collection agency? 

ThisnotThat

tammytammytammy said:

I defaulted a LOT of my car finance payments and i am now paying it off with a debt collection agency. The car keeps breaking down and I really need a new one. Can I trade in the car to a garage?   Who technically owns it? Is it still the finance company even though they've sold their debt to a debt collection agency? 

If the DCA bought the debt, they own it.  If they're merely collecting it, the finance company own it.

DrEskimo

Yes you can trade the car in and the value offered will be used against the remaining balance on the finance.

Question is, what is the value of the car and how much finance is still owing on it?

tammytammytammy

Thanks folks. Think i owe 5 grand still and its now only worth about 3 😐😥

Ebe_Scrooge

So you're in negative equity.  Put simply, if you trade it in and the garage give you £3k for it, you still owe the finance company/DCA another £2k.

You say the car "keeps breaking down" - what exactly is wrong with it?  A cheaper option may be to get it fixed - depending on what the issues are, of course.  In the "trade-in" scenario, you've got to find another £2k, before you've even bought a replacement car - £2k buys a lot of repairs.  It's likely that you could actually get it repaired for a lot less than that.

DrEskimo

Ebe_Scrooge said:

So you're in negative equity.  Put simply, if you trade it in and the garage give you £3k for it, you still owe the finance company/DCA another £2k.

You say the car "keeps breaking down" - what exactly is wrong with it?  A cheaper option may be to get it fixed - depending on what the issues are, of course.  In the "trade-in" scenario, you've got to find another £2k, before you've even bought a replacement car - £2k buys a lot of repairs.  It's likely that you could actually get it repaired for a lot less than that.

Exactly this. You will need to find £2k to settle the finance, and that will likely be through wrapping it up in yet another finance agreement on a new car....you are just putting yourself in more financial risk as the finance owed against the value will keep getting higher and higher.

Don't panic, find a reputable local garage and just get the work done needed to get it running again.

macman

First thing to do is found out exactly what you do owe, not just what you think you owe.