Car on finance, can't pay it

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  • AndrewSandbach
    AndrewSandbach Posts: 4 Newbie
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    macman wrote: »
    Basics: what sort of 'finance deal'? Is it hire purchase, PCP, lease?

    it is a PCP. So I pay monthly for 4 years and then have a balloon payment at the end if I want to actually buy the car.
  • AndrewSandbach
    AndrewSandbach Posts: 4 Newbie
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    Exodi wrote: »
    You bought a car worth £29,000 on finance at 21 and you live at home? The £10,000 (+Service Plan, +Insurance, +MOT, +Tax) you've pumped into this car (that you technically don't own) could have been half a deposit for a house...

    More fool you but I think it's insane that newly fledged adults can go into a dealership, ask for a brand new swanky car to impress their mates despite (usually) being on a low income, and the dealers facilitate it!

    Such a shame, I'm more angry at finance companies enabling this sort of tomfoolery.

    Call the dealer and explore your options. Whatever the outcome, I would start looking at second hand cars worth ~2k.

    Yeah it was a foolish error to make. I was 21 and had a lot of disposable income at the time, job was going very well with a lot of bonuses coming in every month. I was very short sighted and didn't think long term.

    Yes I am going to give the dealership a call today and see what they say.
  • Gaz83
    Gaz83 Posts: 4,047 Forumite
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    Work out how much you would have been due to pay in total over the length of the agreement. Then half that, then subtract what you've already paid.

    If you can find that amount, then pay it, then you can hand the car back without penalty.
    "Facism arrives as your friend. It will restore your honour, make you feel proud, protect your house, give you a job, clean up the neighbourhood, remind you of how great you once were, clear out the venal and the corrupt, remove anything you feel is unlike you... [it] doesn't walk in saying, "our programme means militias, mass imprisonments, transportations, war and persecution."
  • System
    System Posts: 178,093 Community Admin
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    Gaz83 wrote: »
    Work out how much you would have been due to pay in total over the length of the agreement. Then half that, then subtract what you've already paid.
    The maths doesn't work like that because of the interest which in the first half of the term will significantly reduce the capital of the loan you're repaying every month so you can't just look at how much you've made in monthly payments. You also have to include the balloon payment as well when doing the calculation and it usually works out VT point is in the final 6-12 months of the finance agreement.
  • macman
    macman Posts: 53,098 Forumite
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    As above. The OP is only 25 months into a 48 month PCP, so won't be anywhere near the VT point yet.
    No free lunch, and no free laptop ;)
  • Gaz83
    Gaz83 Posts: 4,047 Forumite
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    Hence why I said if they can find the money to take them to that halfway point.

    I'm well aware they won't be anywhere near it currently.
    "Facism arrives as your friend. It will restore your honour, make you feel proud, protect your house, give you a job, clean up the neighbourhood, remind you of how great you once were, clear out the venal and the corrupt, remove anything you feel is unlike you... [it] doesn't walk in saying, "our programme means militias, mass imprisonments, transportations, war and persecution."
  • Mr.Generous
    Mr.Generous Posts: 3,377 Forumite
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    I suspect the car finance business could be in for a big hit if either interest rates rise or unemployment goes up. So many people in this position.

    I might lease my next car, for the previous 35 years I have saved up until I could afford what I wanted. Not sure I want to invest a big sum in a depreciating lump of metal anymore. Buying new cars was the worst financial decision I have ever made. Borrowing money to do so would have been worse still.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Mr.Generous wrote: »
    I suspect the car finance business could be in for a big hit if either interest rates rise or unemployment goes up. So many people in this position.


    That wont affect existing leases. Yes, many people in this position, from memory circa 85% of new cars are bought on PCP.


    Mr.Generous wrote: »
    I
    Not sure I want to invest a big sum in a depreciating lump of metal anymore.


    You are still paying for depreciation with a lease or PCP deal, its factored into the price. Difference is you know what it will be, at most, with certainty.

    Mr.Generous wrote: »
    I
    Buying new cars was the worst financial decision I have ever made. Borrowing money to do so would have been worse still.


    Depends. I've bought on 0% before, and also got freebies such as cheap maintenance, money back, for taking out the loan (and then paid off within a few days so its very short term borrowing)
  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
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    Mr.Generous wrote: »
    Not sure I want to invest a big sum in a depreciating lump of metal anymore. Buying new cars was the worst financial decision I have ever made. Borrowing money to do so would have been worse still.

    I agree about your opinion about borrowing money - but I wouldn't think about cars (daily drivers) as investments, think about buying the next car as damage limitation or minimizing/mitigating your liability on future running costs.

    Definitely don't need to spend anything more than 4 figures on reliable transport - my current one is £5K soon to be replaced with one for half the value.
  • Mr.Generous
    Mr.Generous Posts: 3,377 Forumite
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    AnotherJoe wrote: »
    That wont affect existing leases. Yes, many people in this position, from memory circa 85% of new cars are bought on PCP.

    And how many of these people have mortgages and will prioritise keeping their homes? I think interest rate rise would hit hard all other lenders whether fixed rate or not.
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