We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

HP Debt - VT or Surrender?

Options
babayaga96
babayaga96 Posts: 36 Forumite
10 Posts Name Dropper
Hello everyone,

I have been advised by experts on the debt section to write here. 

I bought a 2017 Mazda 6 2.2 Diesel in August 2024 on HP loan. Bought it for 10K with £289 per month over 5 years. Due to unforeseen circumstances I am unable to make the payments from May. I just received NOSIA letter today. 

I have still not paid 50% of the total owed amount. What is the best solution for me to get rid of the car?

PS: I am in the process of defaulting on my unsecured debt as well and getting on a DMP. Considering this what would be the best way forward with less financial damage for me?
«1

Comments

  • DrEskimo
    DrEskimo Posts: 2,435 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    Have you looked at what the value of the car is if you were to sell it to a local garage/dealer/online car buyer? If not, look at that and compare it to your current finance settlement figure (not the total amount outstanding, but the cost to settle the finance in full today). 


  • Goudy
    Goudy Posts: 2,144 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    This is tricky.
    You are so far from paying off 50%, so voluntary termination isn't an option.

    You could try and see if you can sell the car to trade, as DrEskimo is suggesting.
    First get a settlement figure from your finance company.
    This settlement will be based on the outstanding capital of your loan plus around 56 days interest.
    This is far less than another 4 years worth of interest and the capital plus whatever you have already defaulted on.

    Then see what the various car buying sites and dealers will offer you for the car.
    You need a concrete offer from a trade buyer to cover the settlement figure, otherwise the finance company will want the difference from you, there and then.

    I suspect though you will have a difference to make up.
    The payments you have already made on this 5 year loan include a lot of interest, so the capital you have paid off is minimal compared to the cars depreciation (and don't forget to bought Retail and are now trying to sell Trade, so there's around 20% Retail profit in the original price).  

    Other than that, have to contacted the finance company and explained you situation?
    You need to be honest and up front with them and see what they can do for you.


  • fatbelly
    fatbelly Posts: 22,946 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    This isn't about getting out debt-free. It is about minimising the debt by using the legislation to your advantage.

    All the info you need is on your other thread


  • Herzlos
    Herzlos Posts: 15,870 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    On the other thread you talk about needing a car but being able to make do on a bicycle. What exactly do you need the car for - what kind of distance and what do you need to carry?

    If you can manage on a bicycle, then you may be much better off buying an e-bike instead of a £500 car. Much lower maintenance and insurance for starters. 
  • babayaga96
    babayaga96 Posts: 36 Forumite
    10 Posts Name Dropper
    @DrEskimo £5000
  • babayaga96
    babayaga96 Posts: 36 Forumite
    10 Posts Name Dropper
    @Herzlos I work in field sales so yes a car would be ideal and comfortable but if I am left with no choice then I will cycle my way around. 
  • Herzlos
    Herzlos Posts: 15,870 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    If you work in field sales, can your employer provide a car? Even if you take a pay cut for it, it'll remove the debt liability. 
  • DrEskimo
    DrEskimo Posts: 2,435 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    @DrEskimo £5000
    What is this number? Is this the valuation of the car, the settlement for the finance, or the difference between the cars valuation and the settlement?
  • babayaga96
    babayaga96 Posts: 36 Forumite
    10 Posts Name Dropper
    @Herzlos Unfortunately they don't. 

    @DrEskimo Valuation of the car. Unfortunately I cannot sell the car to a trader because I am not capable of covering the difference amount. The settlement amount is £9700.
  • DrEskimo
    DrEskimo Posts: 2,435 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    50% depreciation in just a year seems pretty steep...where was the £5k valuation from? I would make sure to get a range of quotes from independent garages as well. Looking on Autotrader, most 2017 Mazda 6's with the 2.2 diesel are priced around the £9/10k mark unless it has high miles on it (>100k). Feels like £5k is a low ball offer?

    You are still likely to have a shortfall given the high APR on the loan (I work out it must be in the high 20%?), but if you can narrow that difference between the settlement and trade in value to say £2/3k, do you think you can get a small unsecured loan to cover it?

    Not completely out the woods, but would change £9,700 of secured car debt into £2/3k of unsecured debt, so a move in the right direction.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.9K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.9K Work, Benefits & Business
  • 598.8K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.