Voluntary termination v alternative solutions?

[Ananda]

hello
you seem to know a lot about this and I'm so confused so hoping you can help

I took out a conditional sale agreement on a new car for my daughter in march 2016. The plan was that she was going to pay for this from her PIP (disability) allowance of £200pm, but the loan company would not accept this as income. So I took the contract, with the understanding she would pay me, which she did, until the government stopped her payments . The repayments are £208pm. She has lost her appeal and I'm left with the contract. (I am semi retired, and have surgery coming up, so will be on v low income soon, but I dont have a lot of energy for complex situations)

From my understanding of your post, we're so far off the 50% paid, maybe its not worth pursuing. We have paid just under £3000 of £11,447, (total amount payable) so I'm assuming we would have to pay almost another £3K plus return the car.

Its occured to me that it may be better to borrow the balance outstanding , (£7374), pay it off and then sell the car , ( for about £6K) or even better try and sell it then pay it off, but I suspect thats illegal.
Does this sound a better/more realistic option or am I missing something? I have never bought on finance before (except a mortgage) so it all new to me.

Thanks in advance for your help
Ananda

[R0b]

Re: Voluntary termination v alternative solutions?

Evening,

There could be a couple of options available to you in this situation. You said that the value of the car is around £6k but is this your own guess or have you had it valued already? Selling private is likely to get you a better price if you can hold your nerve but if you want quick cash perhaps a dealer is the next best thing.

Also, do you know for certain that you can get another loan on top of the one you have with the car, or is this pure speculation?

As you have said, provided you can get the loan and then pay off the car, then you could sell the car and maybe have less outstanding to pay. One thing to note on this is when you pay off the car early, its call early settlement payment. When you exercise this option, you are entitled to a rebate which is where the interest is deducted form the remaining months of the contract so your only left with the loan amount.

On the other hand, if you VT there is an option under the CCA which means you might be able to pay less than 50% of the total amount payable, but it requires going to court and this is likely to require some deadlines and can be stressful at times. It's not guaranteed but can be helpful where you've just taken out a contract and there hasn't been alot of depreciation in the car since its use and, if as you say, you don't want complex situations then this is probably not for you but I thought I'd mention it anyway.

[xs2man]

Re: Voluntary termination v alternative solutions?

If you stick the car details into the likes of We Buy Any Car, it will give you an approximate trade value for the car. If you decide to use them, expect them to take money off for little defects that they will inevitably find scattered around the car. BUT, it will give you an idea of the value you could reasonably expect from a dealer too. So will give you a realistic idea on how that will work out if you decide to sell it then settle finance.

My experience of trying to sell a car, is that for the most part, you need to hold out to get much more than this amount, even via private sale. Unless the car in question is particularly desirable, like a GTI or something a bit more special than a run of the mill type like a Punto or similar. Otherwise, most buyers will offer trade price, or a little above it. Don't expect to get anywhere like dealer prices, as they have overheads and warranty to consider when selling a car. If your car has any warranty on it, then make that a selling point. If it doesn't, it might be worth speaking to the manufacturers warranty company to find out how much a policy costs, and if it's transferable. If you can offer a potential buyer a car with warranty, it will greatly help the chances of maximising your return, or at least speeding up the process. And it might even not be "THAT" expensive. Certainly, when I went to sell my old 3 series, the years comprehensive warranty, bought for about £230, made it a much easier sell (but then it was a desirable 335d with BMW's great manufacturer backed warranty and emergency service).

If you sell the car to "the trade", they will clear off the finance, or as much of the finance as they value the car at. At that point, you have to settle the remainder of the finance too. Same with a private sale. You get the buyer to pay the finance company direct, you make up the shortfall, and they take the car. There may well be less "shortfall" to make up with a private sale though, so might be worth trying first. And you may have to contact the finance company first for permission to sell the car. But either way, you will have to settle the remaining balance, in full, at the time of sale.

R0b and the like will no doubt be much better to advise on the more "technical" ways out of the car though.