Reducing HP repayments - advice appreciated.

covkid_3

I'm hoping some of you kind souls can offer some advice for me.

In May last year I bought a car on Hire Purchase, borrowing £10,000 over 4 years. My payments are currently around £258 a month. The finance is with VW financial services. To settle the loan now would cost approx £8600.

My wife and I have sat down since the new year and decided we need to start spending less every month. One area we can trim down is our car. I can see a few possible options

1. Ideally I would like to keep my car but refinance the HP with the lender over a longer period to reduce the payments by about £80-100 per month. How likely are they to agree to this?

2. Sell the car back to the dealer. Not ideal as I'll only get trade value but this would still give me over a grand back to put down on a cheaper car with a smaller HP loan.

I'm a long way off paying 50% of the loan enabling me to simply hand it back to them so that's not an option. Also, as my credit rating is not great, I can't get a personal loan to pay off the car either (this also limits my borrowing options to HP).

Not an easy position I know but any advise would be welcome.

CLAPTON

Assuming you get charged the same interest rate, then to reduce your payments by £100 would mean changing your 4 year deal to a 8 year deal. The total interest paid would go up from about 2,500 to over 5,300.

To reduce by £80 would mean a 7 year deal.

Frankly unless you are absolutely desperate I wouldn't do this. If however you do persue this line make sure they don't increase the APR or sell you PPI.

Whether selling back to the dealer is a good option very much depends upon what they would give you for the car in relation to the settlement amount... you would need to enquire about this before any advice can be given.

The obvious alternative is to get a personal loan at lower APR but you say you can't do that.

covkid_3

Thanks for the advice. Maths isn't my strongest suit so any information about refinancing is appreciated, thank you. Trade books like Glass's say the Trade value (not p/x value) is about £10,100 for my Golf, and it's a VW dealer i'd by offering it to.

speedbird1973

If you've paid £258 over four years on an HP deal then you'll have a final option to own payment on top of the £10000.

I pay 298 a month. I have to pay 22k in total. 15k is the "loan" and 7k the final payment. If you want to return the car you must have paid have the TOTAL value not just the loan part of the arrangement!!

Check your figures again, You'll be tied into this until over 3 years into a 4 year deal.. i'd guess about 38 months.