Refinancing baloon payment

anto135

My pcp ends in November and I’m looking at keeping my car, but the baloon payments around £12k.

I need to look at my options about refinancing but I’m under the impression I won’t get a solid offer from anywhere until they hard credit check me. This is making me think that this will then impact my ability to get another option if I were to try with someone else to see if I could get a better deal, as they’d also want to hard credit check, is this the case and any suggestions?

born_again

Ask your main bank 1st. They may just do a internal check to see if they will lend you the funds.

Goudy

Who is the finance with?
Most car finance companies will refinance the GFV at the end of the contract, but you need to contact them in advance, otherwise they'll take/attempt to take the GFV amount on payment date.

It's not really a cheap option though.
You've already paid interest on that £12k and you will again when you refinance it.

DullGreyGuy

anto135 said:

My pcp ends in November and I’m looking at keeping my car, but the baloon payments around £12k.

I need to look at my options about refinancing but I’m under the impression I won’t get a solid offer from anywhere until they hard credit check me. This is making me think that this will then impact my ability to get another option if I were to try with someone else to see if I could get a better deal, as they’d also want to hard credit check, is this the case and any suggestions?

If you want motor finance then most will do a hard search to check and yes that may impact your ability to get finance elsewhere. Your current provider may be willing to consider it without further checks but as the FCA is going ever harder on affordability that may not be the case. 

Your alternative is a personal loan instead of vehicle finance, at least with this many lenders do have a soft check option which won't guarantee the loan will be given etc but is much more likely than a blind application. 

anto135

Thanks for the advice, in answer to one of the questions it’s with Alphera.

The finance company has got in contact to advise it’s due up but I don’t need to make the decision till November. 

I appreciate I’ll be paying more interest, but I’m actually in positive equity with the car currently. I got the car just post covid so managed to get a good price and and had a friend who’s brother was quite senior within the finance company so got a good apr rate on the finance. However I’ve heard the laws / regulations on this were recently changed so that you can’t exactly get a better deal just by knowing someone within a business?

Given I’m in positive equity, would it be a better idea to part exchange, I’m guessing that would that just come down to my personal choice?

Betterthanlife

There are  a lot of comparison sites for loans that will do a soft search across lenders and give an indication of how likely you are to get the loan if you apply, apr etc.,  would that work not for you? 

https://www.moneysavingexpert.com/eligibility/loans/?&source=GOO-0X0000048C2DEA4236&gclid=Cj0KCQjwtsy1BhD7ARIsAHOi4xYcsOp_9WAgrezzjSW60bTmX5jM8AZ_KsSh7_Uai7lxUWJkn1mu00EaArHnEALw_wcB&gclsrc=aw.ds 

DullGreyGuy

anto135 said:

I appreciate I’ll be paying more interest, but I’m actually in positive equity with the car currently. I got the car just post covid so managed to get a good price and and had a friend who’s brother was quite senior within the finance company so got a good apr rate on the finance. However I’ve heard the laws / regulations on this were recently changed so that you can’t exactly get a better deal just by knowing someone within a business?

Given I’m in positive equity, would it be a better idea to part exchange, I’m guessing that would that just come down to my personal choice?

The FCA have for a while been very interested in conflicts of interests (like the customer being mates with someone in the financial services company) and so more are being cautious (didnt stop my Home claim being settled in under 3 hours thankfully). 

You have two options... you buy the car or your give the car back. There is no point giving the car back if the balloon is significantly below the value of the vehicle. If you "trade it in" you simply buy it from the finance company and sell it to the dealerhship simultaneously just you get a lower value by trade in than selling it another way typically. 

It's really up to you and if you want to keep the car or want a newer car. Thankfully when my PCP came to an end it was massively out of the money so absolutely no point paying the balloon. 

Goudy

anto135 said:

Given I’m in positive equity, would it be a better idea to part exchange, I’m guessing that would that just come down to my personal choice?

All things being equal, that makes sense.
You owe less for your car than it's worth so it might appear a good option to cash in now, trade it in for a new car and use the difference towards the deposit on the new one.

You aren't borrowing again to pay off a loan that has already had a load of interest slapped on it, you're just borrowing again for a new product.

Dealers will quickly workout what the GFV is and will often push their trade in prices up to get a new deal over the line.
Other times you have to play hardball and insist you have a certain amount of equity to take forward. Quite often this means back and forth trips to various dealers to see who jumps first.

Your current car might now to starting to want various bits and pieces or a major service is on the horizon. Tyres, brakes or even a timing belt which might be worth avoiding.
(for anyone interested, I recently heard MG Motors charge £940 for their MG3 Hybrid Plus 4th year service, so the cost of it's 1st, 2nd, 3rd and 4th servicing is over £2000 and it doesn't look like they offer a 4 year service plan either)

I manage to eek out my cars for 3 or 4 year as I rotate the tyres and I've always easy on things like brakes. Maybe a little more if it has a longer warranty and I've had to change a tyre or two because of punctures.

If it's looking like it's time for me to chop it in, I'll work my butt off on the trade in value first. I usually qualify for a NHS discount (which I hit them after arranging trade in price) so it makes the changes a bit more bearable.

Thing is now not everything is equal.
There is a massive difference between what you paid for your car 3 or 4 years ago to what the same/similar model costs today.

New prices have climbed a lot in the last few years. Your basic entry level Dacia Sandero is now nearly £14k when a few years ago it was more like £7k. (no one bought that one, so lets say £8k for the next one up).

Fords cheapest car last year a new Fiesta for around £19k, now you pay over £25k for a Puma which is now their cheapest car.

This means a bit of thought is needed.
Do you borrow again to pay off what you already borrowed and continue to maintain the car which could be outside of warranty and due some work.
Or
Borrow for a new one, knowing you'll probably have to borrow a bit more unless you are down sizing car.

motorguy

anto135 said:

Thanks for the advice, in answer to one of the questions it’s with Alphera.

The finance company has got in contact to advise it’s due up but I don’t need to make the decision till November. 

I appreciate I’ll be paying more interest, but I’m actually in positive equity with the car currently. I got the car just post covid so managed to get a good price and and had a friend who’s brother was quite senior within the finance company so got a good apr rate on the finance. However I’ve heard the laws / regulations on this were recently changed so that you can’t exactly get a better deal just by knowing someone within a business?

Given I’m in positive equity, would it be a better idea to part exchange, I’m guessing that would that just come down to my personal choice?

if you're happy with the car, finance the baloon and keep it.

You should be able to do a soft check via the MSE tool as to what rate you'll likely get.

Its going to be waaaaaayyyyy cheaper than putting yourself in to ££,£££'s more debt at a higher interest rate than you're paying currently and on a car that - unlike yours - is going to depreciate heavily.

motorguy

Goudy said:

anto135 said:

Given I’m in positive equity, would it be a better idea to part exchange, I’m guessing that would that just come down to my personal choice?

All things being equal, that makes sense.
You owe less for your car than it's worth so it might appear a good option to cash in now, trade it in for a new car and use the difference towards the deposit on the new one.

You aren't borrowing again to pay off a loan that has already had a load of interest slapped on it, you're just borrowing again for a new product.

Dealers will quickly workout what the GFV is and will often push their trade in prices up to get a new deal over the line.
Other times you have to play hardball and insist you have a certain amount of equity to take forward. Quite often this means back and forth trips to various dealers to see who jumps first.

Your current car might now to starting to want various bits and pieces or a major service is on the horizon. Tyres, brakes or even a timing belt which might be worth avoiding.
(for anyone interested, I recently heard MG Motors charge £940 for their MG3 Hybrid Plus 4th year service, so the cost of it's 1st, 2nd, 3rd and 4th servicing is over £2000 and it doesn't look like they offer a 4 year service plan either)

I manage to eek out my cars for 3 or 4 year as I rotate the tyres and I've always easy on things like brakes. Maybe a little more if it has a longer warranty and I've had to change a tyre or two because of punctures.

If it's looking like it's time for me to chop it in, I'll work my butt off on the trade in value first. I usually qualify for a NHS discount (which I hit them after arranging trade in price) so it makes the changes a bit more bearable.

Thing is now not everything is equal.
There is a massive difference between what you paid for your car 3 or 4 years ago to what the same/similar model costs today.

New prices have climbed a lot in the last few years. Your basic entry level Dacia Sandero is now nearly £14k when a few years ago it was more like £7k. (no one bought that one, so lets say £8k for the next one up).

Fords cheapest car last year a new Fiesta for around £19k, now you pay over £25k for a Puma which is now their cheapest car.

This means a bit of thought is needed.
Do you borrow again to pay off what you already borrowed and continue to maintain the car which could be outside of warranty and due some work.
Or
Borrow for a new one, knowing you'll probably have to borrow a bit more unless you are down sizing car.

Find a local indy and keep the car well maintained.

That will be exponentially cheaper than buying a new / newer car, given how pricey they are not and at much higher interest rates.

The threat of "big bills" is dramatically overplayed IMHO.  Buying a new car to avoid paying for tyres and maybe a timing belt change is crazy.

Ectophile

Goudy said:

anto135 said:

Given I’m in positive equity, would it be a better idea to part exchange, I’m guessing that would that just come down to my personal choice?

All things being equal, that makes sense.
You owe less for your car than it's worth so it might appear a good option to cash in now, trade it in for a new car and use the difference towards the deposit on the new one.

You aren't borrowing again to pay off a loan that has already had a load of interest slapped on it, you're just borrowing again for a new product.

Dealers will quickly workout what the GFV is and will often push their trade in prices up to get a new deal over the line.
Other times you have to play hardball and insist you have a certain amount of equity to take forward. Quite often this means back and forth trips to various dealers to see who jumps first.

Your current car might now to starting to want various bits and pieces or a major service is on the horizon. Tyres, brakes or even a timing belt which might be worth avoiding.
(for anyone interested, I recently heard MG Motors charge £940 for their MG3 Hybrid Plus 4th year service, so the cost of it's 1st, 2nd, 3rd and 4th servicing is over £2000 and it doesn't look like they offer a 4 year service plan either)

I manage to eek out my cars for 3 or 4 year as I rotate the tyres and I've always easy on things like brakes. Maybe a little more if it has a longer warranty and I've had to change a tyre or two because of punctures.

If it's looking like it's time for me to chop it in, I'll work my butt off on the trade in value first. I usually qualify for a NHS discount (which I hit them after arranging trade in price) so it makes the changes a bit more bearable.

Thing is now not everything is equal.
There is a massive difference between what you paid for your car 3 or 4 years ago to what the same/similar model costs today.

New prices have climbed a lot in the last few years. Your basic entry level Dacia Sandero is now nearly £14k when a few years ago it was more like £7k. (no one bought that one, so lets say £8k for the next one up).

Fords cheapest car last year a new Fiesta for around £19k, now you pay over £25k for a Puma which is now their cheapest car.

This means a bit of thought is needed.
Do you borrow again to pay off what you already borrowed and continue to maintain the car which could be outside of warranty and due some work.
Or
Borrow for a new one, knowing you'll probably have to borrow a bit more unless you are down sizing car.

And that way leads to paying finance on a car every month for the rest of your life, or at least until you're too old to drive and hand your licence back.

The alternative is to finish paying for the finance, and then keep the car until it's no longer economically viable to maintain.