Car finance question.
Discussion
I'm sure some of you well informed chaps will have a quick answer here. My sister-in-law called me today with this query : She has a 2.5 year old Toyota on a 3 year pcp, it has a settlement of 8k . She has found a brand new Mazda she wants and is looking to roll the equity from the old car in to it. She's a lowish earning single mum and asked me how will she pass for credit with a new arrangement when her credit file will show 8k outstanding on her current car and the finance is with another provider. Her credit rating will be very good but her earnings are circa 15k. Any thoughts or help please ?
The finance company she is applying with will see she has the finance on the other car, if they have an issue with it they will speak to the dealer about what is happening to it.
You said equity, does she have equity or do you mean negative equity? As that can be a problem for some finance companies.
You said equity, does she have equity or do you mean negative equity? As that can be a problem for some finance companies.
Fair enough, so the basic idea is that the dealer will show the new finance company that they are taking the PX in and that there is 2k equity going in as deposit towards the new car.
This will actually work in her favour as it reduces the amount she will need to borrow on the new car. The more cash she can put in on top will help.
This will actually work in her favour as it reduces the amount she will need to borrow on the new car. The more cash she can put in on top will help.
I don't know enough from the figures you quoted but isn't someone earning £15k a year changing a perfectly good 2.5 year old car for a brand new one complete and utter madness?
She's already been hit with the massive depreciation on the Toyota - why on earth would she want to throw even more money away on a new Mazda?
I know some of the PCP/lease/whatever deals are good these days, but you can't usually run away from that initial depreciation hit, can you?
If it were my relative asking for advice, I would be looking at the monthly costs and insisting she stuck with the cheaper option, whichever it is. Maybe include an extended warranty if she is really worried about reliability and the risk of big bills.
She's already been hit with the massive depreciation on the Toyota - why on earth would she want to throw even more money away on a new Mazda?
I know some of the PCP/lease/whatever deals are good these days, but you can't usually run away from that initial depreciation hit, can you?
If it were my relative asking for advice, I would be looking at the monthly costs and insisting she stuck with the cheaper option, whichever it is. Maybe include an extended warranty if she is really worried about reliability and the risk of big bills.
walm said:
I don't know enough from the figures you quoted but isn't someone earning £15k a year changing a perfectly good 2.5 year old car for a brand new one complete and utter madness?
She's already been hit with the massive depreciation on the Toyota - why on earth would she want to throw even more money away on a new Mazda?
I know some of the PCP/lease/whatever deals are good these days, but you can't usually run away from that initial depreciation hit, can you?
If it were my relative asking for advice, I would be looking at the monthly costs and insisting she stuck with the cheaper option, whichever it is. Maybe include an extended warranty if she is really worried about reliability and the risk of big bills.
It may well be that swapping the Toyota for a new Mazda is cheaper for her. It may reduce the monthly payments or maybe just keep them the same. She's already been hit with the massive depreciation on the Toyota - why on earth would she want to throw even more money away on a new Mazda?
I know some of the PCP/lease/whatever deals are good these days, but you can't usually run away from that initial depreciation hit, can you?
If it were my relative asking for advice, I would be looking at the monthly costs and insisting she stuck with the cheaper option, whichever it is. Maybe include an extended warranty if she is really worried about reliability and the risk of big bills.
At the moment it appears that she has £2k of equity in the car, in 6 months time when she has to either hand the car back or pay the baloon of several thousand pounds there might be no equity.
oldnbold said:
It may well be that swapping the Toyota for a new Mazda is cheaper for her. It may reduce the monthly payments or maybe just keep them the same.
At the moment it appears that she has £2k of equity in the car, in 6 months time when she has to either hand the car back or pay the baloon of several thousand pounds there might be no equity.
Got it.At the moment it appears that she has £2k of equity in the car, in 6 months time when she has to either hand the car back or pay the baloon of several thousand pounds there might be no equity.
In which case, fair enough.
It just seemed unlikely that having put on a "large" deposit for the Toyota she would be able to lower the monthly with just £2k to put down this time...
walm said:
oldnbold said:
It may well be that swapping the Toyota for a new Mazda is cheaper for her. It may reduce the monthly payments or maybe just keep them the same.
At the moment it appears that she has £2k of equity in the car, in 6 months time when she has to either hand the car back or pay the baloon of several thousand pounds there might be no equity.
Got it.At the moment it appears that she has £2k of equity in the car, in 6 months time when she has to either hand the car back or pay the baloon of several thousand pounds there might be no equity.
In which case, fair enough.
It just seemed unlikely that having put on a "large" deposit for the Toyota she would be able to lower the monthly with just £2k to put down this time...
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