Bridging Loan

kellywelly76

My husband bought a van on HP to start a new business venture being a delivery driver. All was going well for the first 10 months. Then it all went down hill. The cost of fuel has made his job impossible. 
Anyway, we are now stuck with a van costing over £700 a month for the HP agreement and no money coming in to cover it. He has spoken to the finance lender, but they have said the van isn't worth what is left on the agreement and that because he's not had the van for 2 years he cannot cancel the agreement.
He cannot sell the van privately as it's on HP. So we were thinking of getting a bridging loan. Pay off the HP, sell the van ( at a loss ) pay back the majority of the bridging loan and then get a smaller loan for whatever the difference is. 
Is this something anyone else has done? We really don't know what else to do. 
He has started applying for a new job, but so far no luck.
Any advice will be gratefully received.

DrEskimo

Bridging loan seems like a bad idea.

Whilst you are right, you can't sell the car given it has secured finance owing on it, you can settle the finance and then sell it. The fact this is done at the point of transaction is not an issue. If you can find a buyer willing, you just ask them to send the money, you clear the finance and then sell it on.

Now the complication comes with having an outstanding amount still on the finance due to the negative equity. For this reason is may be far easier to try and sell this to a local trader, dealer or WBAC type outfit. You could then explore getting a personal loan or using a CC (I'm assuming you can use this for part settlement, but will need to check) to clear the outstanding amount.

How much is owing on the car, and roughly how much is the van worth as a trade in?

sourcrates

Your making this far more complicated than it needs to be, talking about bridging loans, forget any further borrowing here.

He can try selling it to a dealer, who will also be able to settle the finance at the same time, however the outstanding debt may be more than the van is worth.

The other option is to just stop paying, the van will be repossessed, and sold, and he will be liable for any shortfall, and this will be just another non priority debt he can pay back at an affordable rate.

His credit file will obviously suffer with option 2, but at least the problem will be dealt with.

kellywelly76

Thanks for your reply,
I think he owes around 27k. But apparently the van is only worth around 22k because of the milage and a few dints and scratches. 
🤦🏻‍♀️

DrEskimo

kellywelly76 said:

Thanks for your reply,
I think he owes around 27k. But apparently the van is only worth around 22k because of the milage and a few dints and scratches. 
🤦🏻‍♀️

According to who?

Make sure you get a range of quotes from different dealers/traders/online brokers.

It may be that you can get a personal loan for £5k, make an overpayment, then sell the van for the outstanding amount. A 0% CC might even be possible as an overpayment, or the use of a balance transfer CC.

In short, there are a lot of options that are far better than a bridging loan!

kellywelly76

sourcrates said:

Your making this far more complicated than it needs to be, talking about bridging loans, forget any further borrowing here.

He can try selling it to a dealer, who will also be able to settle the finance at the same time, however the outstanding debt may be more than the van is worth.

The other option is to just stop paying, the van will be repossessed, and sold, and he will be liable for any shortfall, and this will be just another non priority debt he can pay back at an affordable rate.

His credit file will obviously suffer with option 2, but at least the problem will be dealt with.

Thanks for your reply.
We did think of just not paying it. But the finance company would sell it at auction for next to nothing and so the shortfall would be rather large. 
So we'd rather try and sell it ourselves. But that's hard when there's outstanding finance on it. ☹️

Nebulous2

During the pandemic vans shot up in price and were very difficult to get, but that seems to be softening slightly. 

What model, mileage? Have you tried We buy any van? A franchised dealer from the same make? 

With a £5k deficit, if you're paying £700 per month, you'd be breaking even in 7 months. 

Grumpy_chap

Vans are in short supply right now, so the depreciation will likely not be as bad as the finance company have made out.

bris

Put the reg into we buy any car and it will give you a trade price. This is actually a good indication of what the van is really worth.

Vans are holding their money just now, prices are still high so dont just take the first person you speak to as gospel.

[Deleted User]

If you're talking about getting a loan to pay off the van and thus monthly payments, why can you not afford to pay for fuel? The fuel prices should drop eventually, particularly if the new PM wants to take action. What about looking at other delivery firms like Uber Eats, doing van removals etc?