Car Finance vs cost of car

benn1

Hi 
Looking for peoples views. We bought a 2nd hand car from a car dealer in July 2022 on finance organised by the dealer.
We now find ourselves struggling with the costs of the repayments,
Looking at the amount left to pay on the car finance we have approx 16K to pay but the car is currently worth 13k, we have kept up with all payments to date.
Ideally we would like to get something cheaper but now face 3K deficit.
Any suggestions??

Phoenix72

Is the £16k the current balance including interest or a settlement figure? If current balance then request a settlement figure as it should be lower.

Herzlos

What's the interest rate on the car loan? You may be able to save a bit just by refinancing it

daveyjp

HP, loan or PCP?

facade

Request a settlement figure.

See what WBAC or similar will buy it off you for.

If the figures match or are close, sell to WBAC, and they will settle the finance. You pay any shortfall as cash to the finance people- or get any surplus as cash.

This leaves you with nothing though, and you will have to finance a cheaper car with no deposit.

You can try and sell it privately for more money, but this may not be a smooth process.

You could even re-finance the settlement figure BUT if you extend the length of your finance you end up with a car that is well out of warranty, and potentially liable for huge bills, that you have to pay while you are still paying back the loan.

The alternative, if the finance is a HP agreement is Voluntary Termination (VT). Once you have paid 50% of the sum borrowed  plus interest you just hand the car back to the finance company and walk away. (This will affect your chances of buying another car on HP straight away, but if you are buying a cheap car for cash it won't matter)

If you had a 4 year HP agreement, you will be close to that point. If it is PCP forget it, as there is a huge balloon payment and you wont reach the 50% point until virtually the end of the term.

benn1

Phoenix72 said:

Is the £16k the current balance including interest or a settlement figure? If current balance then request a settlement figure as it should be lower.

Its the settlement figure

benn1

facade said:

Request a settlement figure.

See what WBAC or similar will buy it off you for.

If the figures match or are close, sell to WBAC, and they will settle the finance. You pay any shortfall as cash to the finance people- or get any surplus as cash.

This leaves you with nothing though, and you will have to finance a cheaper car with no deposit.

You can try and sell it privately for more money, but this may not be a smooth process.

You could even re-finance the settlement figure BUT if you extend the length of your finance you end up with a car that is well out of warranty, and potentially liable for huge bills, that you have to pay while you are still paying back the loan.

The alternative, if the finance is a HP agreement is Voluntary Termination (VT). Once you have paid 50% of the sum borrowed  plus interest you just hand the car back to the finance company and walk away. (This will affect your chances of buying another car on HP straight away, but if you are buying a cheap car for cash it won't matter)

If you had a 4 year HP agreement, you will be close to that point. If it is PCP forget it, as there is a huge balloon payment and you wont reach the 50% point until virtually the end of the term.

I believe its a PCP agreement,
Had a look at WBAC and they are quoting about £13500 compared to a settlement figure of about 16k

motorguy

benn1 said:

facade said:

Request a settlement figure.

See what WBAC or similar will buy it off you for.

If the figures match or are close, sell to WBAC, and they will settle the finance. You pay any shortfall as cash to the finance people- or get any surplus as cash.

This leaves you with nothing though, and you will have to finance a cheaper car with no deposit.

You can try and sell it privately for more money, but this may not be a smooth process.

You could even re-finance the settlement figure BUT if you extend the length of your finance you end up with a car that is well out of warranty, and potentially liable for huge bills, that you have to pay while you are still paying back the loan.

The alternative, if the finance is a HP agreement is Voluntary Termination (VT). Once you have paid 50% of the sum borrowed  plus interest you just hand the car back to the finance company and walk away. (This will affect your chances of buying another car on HP straight away, but if you are buying a cheap car for cash it won't matter)

If you had a 4 year HP agreement, you will be close to that point. If it is PCP forget it, as there is a huge balloon payment and you wont reach the 50% point until virtually the end of the term.

I believe its a PCP agreement,
Had a look at WBAC and they are quoting about £13500 compared to a settlement figure of about 16k

Try motorway - they seem to offer a bit more.

Whats your plans for driving "something a bit cheaper"?

If you're planning to use finance (or even a personal loan) the monthlies may not be much less, if any less.

benn1

motorguy said:

benn1 said:

facade said:

Request a settlement figure.

See what WBAC or similar will buy it off you for.

If the figures match or are close, sell to WBAC, and they will settle the finance. You pay any shortfall as cash to the finance people- or get any surplus as cash.

This leaves you with nothing though, and you will have to finance a cheaper car with no deposit.

You can try and sell it privately for more money, but this may not be a smooth process.

You could even re-finance the settlement figure BUT if you extend the length of your finance you end up with a car that is well out of warranty, and potentially liable for huge bills, that you have to pay while you are still paying back the loan.

The alternative, if the finance is a HP agreement is Voluntary Termination (VT). Once you have paid 50% of the sum borrowed  plus interest you just hand the car back to the finance company and walk away. (This will affect your chances of buying another car on HP straight away, but if you are buying a cheap car for cash it won't matter)

If you had a 4 year HP agreement, you will be close to that point. If it is PCP forget it, as there is a huge balloon payment and you wont reach the 50% point until virtually the end of the term.

I believe its a PCP agreement,
Had a look at WBAC and they are quoting about £13500 compared to a settlement figure of about 16k

Try motorway - they seem to offer a bit more.

Whats your plans for driving "something a bit cheaper"?

If you're planning to use finance (or even a personal loan) the monthlies may not be much less, if any less.

was thinking about getting rid of the expensive car and getting soemthing cheaper but at moment have the issue with more owed than cars worth.

Ectophile

You may find that continuing to pay the finance is the best option.

Selling the car on and paying £3k for somebody to take the car from you isn't great.  But what's worse is that you will then have to find the money to buy another car.

Phoenix72

How much per month are we talking here?