Vehicle Refinancing

Mart7379

Hi guys 
I am not sure if this is the wrong section. My apologies if it is. 

I bought a vehicle on Finance just less than 12 months ago and took it over 5 years, just over 4 years to run on the agreement. I let my heart rule my head when I chose it and I now realise I made a mistake with it and realise it’s slightly too small. Is there any routes I can go down to refinance the vehicle and get a different bigger vehicle.  

Thanks for any advice guys. 

DrEskimo

What type of finance is it? Is it secured on the car or an unsecured loan? I'm guessing it's not a PCP loan with a large final payment given it's over 5yrs?

If it's an unsecured personal loan, simply sell the car privately or trade it in to whoever gives you the most money for it. If you can, go for a replacement car of similar value.

If the loan is secured on the car, you need to get a settlement figure and compare that to the cars value (get quotes from various dealers/garages and online sites like WeBuyAnyCar and Motorway.co.uk). Any shortfall will need to be settled before then thinking about the next car. I would advise strongly against P/X the car and wrapping up any negative equity into the new finance deal.

Then it's about setting up a new finance agreement on the new car.

Mart7379

the finance is secured on the vehicle by way of a standard finance package, nothing in terms of the pcp, I’m unable to clear any shortfall due to having no savings. I recently checked the value of the car and to sell it to someone of the likes of webuyanycar it’s worth between £5,500-£6,500, I bought the car for £7,800 ish but obviously there is interest of top of that at 9% I think (I don’t have the paperwork to hand just figures are an estimated guess), so possibly looking at a shortfall of around £3k 

are there any specialist negative equity finance companies out there that can help me out of a mistake. 

Grumpy_chap

Mart7379 said:

the finance is secured on the vehicle by way of a standard finance package, nothing in terms of the pcp, I’m unable to clear any shortfall due to having no savings. I recently checked the value of the car and to sell it to someone of the likes of webuyanycar it’s worth between £5,500-£6,500, I bought the car for £7,800 ish but obviously there is interest of top of that at 9% I think (I don’t have the paperwork to hand just figures are an estimated guess), so possibly looking at a shortfall of around £3k 

Don't guess at what the shortfall is - find out for certain by requesting a settlement figure from the finance company.

For a 5 year loan of £7.8k at 9% interest, monthly would be about £160 and total repayable circa £9.6k over the full term. 

If you now sold the car for £6.5k, that would only mean a shortfall of £3k if the full term finance was payable.  Finance does not work like that.  If you settle early, you only have to pay the finance up to the time you repay in full.  If the term to date was 12 months, the total repayable would be around £8.2k.  You've already paid £160 x 12 = £1.9k, so selling at £6.3k or more would clear the loan in full.  There may be an admin fee that is not taken into account.

For the above figures, I used the following calculator:
https://www.moneysupermarket.com/loans/calculator/

It is possible you could sell the car now to realise enough to clear the loan in full and then start afresh from a blank sheet.

One other option is that you say you need to swap early for a larger vehicle.  What type of car did you buy and what type of car would you now wish to buy?  In what way do you need more space? 
The reason I ask, is to consider whether you can make do by adding a roof-box or similar, that may be more MSE. 
Obviously, if you bought a MX-5 and the family increased in size, a roof box won't cut it.

Mart7379

Haha I wish it was just a case of needing a roof box, I bought a 2016 Astra, which I believed to be more than big enough. But as I said I let my heart rule my head, I loved the look of them and went out and bought 1

it needs to a bigger vehicle in terms of room for the kids. We have 3, again I fully believed it would be big enough……… Heart over head again. 

In terms of selling the car and having the finance paid in full, if what you say is correct and I owe approx £8k, the car is only worth £6k now, so there would be a shortfall. But I will get in touch with the finance company and ask for an early settlement figure. 

DrEskimo

Mart7379 said:

the finance is secured on the vehicle by way of a standard finance package, nothing in terms of the pcp, I’m unable to clear any shortfall due to having no savings. I recently checked the value of the car and to sell it to someone of the likes of webuyanycar it’s worth between £5,500-£6,500, I bought the car for £7,800 ish but obviously there is interest of top of that at 9% I think (I don’t have the paperwork to hand just figures are an estimated guess), so possibly looking at a shortfall of around £3k 

are there any specialist negative equity finance companies out there that can help me out of a mistake. 

You don't need a specialist, any garage would happily roll the negative equity up into the new deal, it's just not a wise thing to do. You are increasing the amount you are borrowing against an asset that is already depreciating. What if in 12months you decide/or are forced to sell this new car. Now you have the shortfall of the previous car compounded with the shortfall of this car making it even more expensive to settle the finance.

But as @Grumpy_chap says, I don't think you have a shortfall if you can sell it for the top end of that trade in estimate. If the loan was for £7,800 over 60months at 9.9% APR, then the settlement would be round £6,620 after 12months (see Calculator).

Just maximise the sale price of the car by looking at any local garage or dealer (I recently sold my GF's Mini Cooper for around £500 more in around 10mins by just going to a dealer down my road). They will settle the finance on sale of the car and then look for the next one.

The MSE thing to do would be to buy a much cheaper car though, rather than looking to constantly borrow. Financing the entire cost of a car over such a long period of time is not a sensible approach. What if you have an expensive repair bill?

Mart7379

I am reluctant to go out and get another car and have negative equity so I will take your suggestions on board, I will get in touch with the finance company and get a early settlement from them tomorrow and go from there. 

I will update and hopefully get some further assistance and advice from your guys.

Mart7379

Just found the paperwork 
Car was bought for £7,998
Term : 60 months
Monthly : £173
APR : 10.9%
purchased the car 11 months ago. 

Grumpy_chap

Mart7379 said:

In terms of selling the car and having the finance paid in full, if what you say is correct and I owe approx £8k, the car is only worth £6k now, so there would be a shortfall. But I will get in touch with the finance company and ask for an early settlement figure. 

Check the figure with the finance company, but the £8k less £6k less £payments-to-date so not the simple case of £2k shortfall.
Simply ask the finance company for the settlement figure - no need to get into discussions as to why etc.

As @DrEskimo said, get sale figures from WBAC plus Motorway and then drive around some local dealers that buy cars for cash and see what the best you can get is.  The "we buy your car for cash" is not the preserve of back-street dealers - our local Toyota and Lexus dealership both have such a sign displayed.  As well as local independents, try the local Vauxhall dealer.  Cars like yours - good condition 2016 Astra - are in demand so you could land on your feet here.

Good luck.

Mart7379

thanks again guys I will have a look around once I get an accurate early settlement figure from the finance company. 

[Deleted User]

I heard a radio advert yesterday from some chain in the Midlands offering £1k over any market value pricing for their stock, could be worth shopping around as to what you can get not just from the likes of WBAC