Car finance trap
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Don't panic or jump of the bridge. Just look online for decent loan, you will find advice on this website under Cards & Loans. Take a cheap loan from the bank and just settle the finance.
No need to talk to the dealer or cancel original finance. As someone said, you settle it. You call finance company and ask them for settlement figure and pay that. It will be very close to the amount you borrowed, unless you already paid instalment, it might be even lower.
I'm guessing car dealership finance is around 10-12%, which is standard APR for used cars.0 -
Penelopa.Pitstop wrote: »Don't panic or jump of the bridge. Just look online for decent loan, you will find advice on this website under Cards & Loans. Take a cheap loan from the bank and just settle the finance.
No need to talk to the dealer or cancel original finance. As someone said, you settle it. You call finance company and ask them for settlement figure and pay that. It will be very close to the amount you borrowed, unless you already paid instalment, it might be even lower.
I'm guessing car dealership finance is around 10-12%, which is standard APR for used cars.
Not sure if you have the funds available why you would advise not using the "Right of Withdrawal" or "Cancellation right" (as most call it) during the 14 day window when its by far the cheapest option - No Doc Fee to pay, No Option to Purchase Fee to pay, and No additional 58 Day Interest to pay - all of which would be payable if you settle.0 -
So it appears you have approached the finance company and the dealership and neither will help you? Is that correct?
Bankruptcy is using a sledgehammer to crack a nut. Don't do that if you can afford the payments. The best way to minimise the interest is to either overpay or repay earlier using a cheaper finance agreement like a bank loan. That £7k will only apply if you keep the loan for the full period unless the interest is front loaded. Go through the agreement and see if there are penalties for early repayment. My suggestion is that you overpay as much as possible in the early months and then as soon as you are able to get a bank loan to repay it in full you do that. An expensive lesson but a useful one never to take out that amount of finance without looking into the small print and comparing options first. I would not sell the car immediately. It probably wont clear the loan due to high depreciation on new cars and you will still need a car presumably.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0 -
In this day and age, what remotely makes you think it could be?unless the interest is front loaded0 -
I'm not sure if there's enough time to cancel finance within time limits. OP also needs to make sure she/he has secured new loan first.Not sure if you have the funds available why you would advise not using the "Right of Withdrawal" or "Cancellation right" (as most call it) during the 14 day window when its by far the cheapest option - No Doc Fee to pay, No Option to Purchase Fee to pay, and No additional 58 Day Interest to pay - all of which would be payable if you settle.
I checked this company website and their car finance example is 13.9% APR.0 -
Base price of the car was 18,000
I handed my own old car as px and the price dropped to 15,000
Total amount payable on the loan is 25,000Also my bank can only borrow me 11,500 which is not enough to pay off the finance at once.
Also my bank can only lend that amount for over 60 months time and I would have to give back almost 19.000
If your annual salary is only £19k and your bank is willing to loan you £11.5k on top of £15k car finance loan then you are doing well.
Your monthly income after tax is circa £1,300. Is there any way you could save £600 per month from this for the next 6 months? If you can, then you would have £3,600. Let’s say you add this to the £11.5k your bank is willing to loan you, you would have the £15k needed to clear your car finance. You would still need to be making the car payments during that 6 month period as well.
Yes paying back £19k for a £11k loan is high, but £19k is still saving you £6k from the original car finance deal of you paying back £25k. You can always look to reduce the bank loan at a later date when your salary has increased and/or your credit history is better and you could take out another loan at a lower rate to get rid of the high interest amount on the bank loan.I'm a Board Guide on the Credit Cards, Loans, Credit Files & Ratings boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views are mine and not the official line of moneysavingexpert.com0 -
Or bankrupcy as I don't see other options
You will not be grated bankruptcy of you are not insolvent so you can forget that as a get-out. Also, the impact of bankruptcy will have a far greater negative impact on your life than living with the loan - no point in jumping out of the frying pan into the fire.
As you have exhausted all other options you'll have to live with your decision. Perhaps in a couple of years or so you will reach the point where your ability to borrow on better terms will improve and the outstanding balance will fall to a point where you can re-finance at a better rate.0 -
Your options are really:
Find a better rate loan for the whole amount. Will save you the most money.
Overpay the finance deal and clear it earlier. Will save you a reasonable amount of money.
Sell the car, and take a loan out to settle the finance balance. You'll probably lose less than the £7k you're going to be paying in interest, but you'll then need to source a new car on top.
Bankruptcy would completely screw you for years, so not worth considering if you can afford to pay it off.0 -
poppasmurf_bewdley wrote: »Well, you can tell the dealer you are going to cancel the finance and that you have no other means of financing the car. The ball is then in their court.
Personally, that's the way I would be going. Leaving the car at their front door and the keys inside the showroom and walk away.
The worse they can do is insist you buy the car (which you can't do), and/or keep your deposit. Was the car new or used? If new, then the value of the vehicle now will be much less than if it was used.
They'll probably sue you for their loss. Maybe better than having a £25K debt around your neck.
Bad advice OP.
This poster is obviously the type of person who likes to mess people about.
God knows why people like this can expect their money back after they have messed countless numbers of people and companies about when the only person at fault is yourself.
Be a man, own up to your mistakes (unlike the above) and take the financial hit on the chin.....and learn from the experience.0 -
There are ways you could reduce the hit. Take the maximum loan offered by your bank, as long as the interest rate is less than that of the car loan. As soon as you get the money apply elsewhere for a £3500 loan. Overpay the car finance by the £11,500. If you get the £3500 loan pay off the total car finance. If you don't get the £3.5k overpay the car finance as much as you can and pay the minimum to the bank loan.0
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