Help with camper finance/
Discussion
A friend of mine took out finance on a 24 foot camper. Took it out over ten years, three years ago. The vehicle was £32000 and a deposit of just a £1000 was paid. Obviously she was a bloody fool!
Now, the camper is worth a lot less and the finance payments are crippling her -£500 per month. She owes £42000 including the interest!
She is reluctant to sell it for less than £24000 but there's no interest at that price and hasn't been for two years, so it's got to be worth a lot less than that. She is reticent to tell me what the thing is actually worth, or is sticking her head in the sand, which is more likely!
She's tried to get the finance co to re-possess the thing, but they say if they do, she will still owe £14000. She is still paying the finance each and every month while the van sits and rots.
What is the best way out of this disaster? Bankruptcy?
Now, the camper is worth a lot less and the finance payments are crippling her -£500 per month. She owes £42000 including the interest!
She is reluctant to sell it for less than £24000 but there's no interest at that price and hasn't been for two years, so it's got to be worth a lot less than that. She is reticent to tell me what the thing is actually worth, or is sticking her head in the sand, which is more likely!
She's tried to get the finance co to re-possess the thing, but they say if they do, she will still owe £14000. She is still paying the finance each and every month while the van sits and rots.
What is the best way out of this disaster? Bankruptcy?
If the finance agreement works the same as a car agreement, IIRC if she settles early she will not have to pay all the interest, just interest up to the point of settlement. I don't think finance houses are allowed to front load the interest anymore. She needs to call them and get an exact early settlement figure (not what she will owe if repossesed). I was under the impression that these things didn't depreciate that badly. The fact she has failed to sell it may mean she is rubbish at writing ads or is advertising in the wrong places.
Also if the same as a car agreement IIRC she can hand the vehicle back when she has paid half the amount owed or is halfway through the term.
I would suggest once she has an exact settlement figure, taking it / ringing around a few of the bigger dealers and getting some bids on it from them. I doubt she will get enough to settle but might be able to get out owing only a few £K which she will have to borrow if she doesn't have any savings.
Also if the same as a car agreement IIRC she can hand the vehicle back when she has paid half the amount owed or is halfway through the term.
I would suggest once she has an exact settlement figure, taking it / ringing around a few of the bigger dealers and getting some bids on it from them. I doubt she will get enough to settle but might be able to get out owing only a few £K which she will have to borrow if she doesn't have any savings.
Edited by oldnbold on Tuesday 8th October 12:56
Depends on the type of agreement and exactly how long ago she took out the loan - if it's an unregulated agreement (which, prior to April 2008 and borrowing over £25,000 it would have been), or if it was taken out in a limited company name then the finance company will not be regulated when they calculate settlement figures.
However if it is a regulated agreement then she'll be covered and will be able to request a regulated settlement figure. The finance company will have to adhere to a strict formula when calculating the settlement figure (which is, very roughly, the capital outstanding plus a couple of month's interest.)
£10k interest on a £32k loan may sound like a huge amount, but over a 120 month term it's only about 6% APR (although those figures don't add up to £500 per month.)
So the first thing she needs to do is check what type of finance agreement she has - would be worth requesting a settlement figure in writing from the finance company.
She'll still have the sale of the vehicle to worry about of course!
However if it is a regulated agreement then she'll be covered and will be able to request a regulated settlement figure. The finance company will have to adhere to a strict formula when calculating the settlement figure (which is, very roughly, the capital outstanding plus a couple of month's interest.)
£10k interest on a £32k loan may sound like a huge amount, but over a 120 month term it's only about 6% APR (although those figures don't add up to £500 per month.)
So the first thing she needs to do is check what type of finance agreement she has - would be worth requesting a settlement figure in writing from the finance company.
She'll still have the sale of the vehicle to worry about of course!
£32000
£1000 deposit.
£31000
120 x £500
That's 15% APR!
Settlement figures should be in the ballpark of £26-£27k.
Total repayments are, unbelievably £61,016 so she could possibly VT after paying... £30,508 roughly in 2 years time. Of course you have to return it in reasonable condition, so they made have to do it up, to give it away.
That is a horrific mess. I've NEVER understood the point of camper vans. Look at this 'deal' for as little as £6000 a year, you can empty your own s
ts down a drain in the Lake District, well after you've chugged your plastic castle up there at 50mph doing 8mpg. On balance I'd rather live like a Human and stay in a nice hotel with proper plumbing.
Anyway, I've no idea how to get out of this one. Need more info about the owner, but you can't get become bankrupt because you don't want to pay the finance anymore, at least you'd need to prove a chance in circumstances. She will kiss goodbye to all her sellable assets and credit ability.
FFS don't get it repo'd! They take it, send it to auction (to prove they got fair market value) in the middle of winter and someone may nick it for £5k, they'll take off a grand in fees and your friend will end up owing most of it.
In absence of a better plan, suck it up, keep the thing in reasonable nick and wait 2 years until it can be VT'd - fk it, I'd live in the fker for 2 years and save the rent / mortgage.
£1000 deposit.
£31000
120 x £500
That's 15% APR!
Settlement figures should be in the ballpark of £26-£27k.
Total repayments are, unbelievably £61,016 so she could possibly VT after paying... £30,508 roughly in 2 years time. Of course you have to return it in reasonable condition, so they made have to do it up, to give it away.
That is a horrific mess. I've NEVER understood the point of camper vans. Look at this 'deal' for as little as £6000 a year, you can empty your own s
ts down a drain in the Lake District, well after you've chugged your plastic castle up there at 50mph doing 8mpg. On balance I'd rather live like a Human and stay in a nice hotel with proper plumbing. Anyway, I've no idea how to get out of this one. Need more info about the owner, but you can't get become bankrupt because you don't want to pay the finance anymore, at least you'd need to prove a chance in circumstances. She will kiss goodbye to all her sellable assets and credit ability.
FFS don't get it repo'd! They take it, send it to auction (to prove they got fair market value) in the middle of winter and someone may nick it for £5k, they'll take off a grand in fees and your friend will end up owing most of it.
In absence of a better plan, suck it up, keep the thing in reasonable nick and wait 2 years until it can be VT'd - f
k it, I'd live in the fker for 2 years and save the rent / mortgage. Edited by P-Jay on Tuesday 8th October 15:40
Edited by P-Jay on Tuesday 8th October 15:41
Assuming it was £32k, deposit of £1k and 120 payments of £500, the interest rate is 15%. At the end of year three, there will be roughly £26,000 of capital outstanding. If it's a regulated agreement the settlement will be £27k or so, and the point of voluntary termination will come at about 5 years - another £12k of payments.
So if it's worth £24k now, settle for £27k (sell privately and pay an additional £3k to hand it back). The alternative is to pay another £12k and hand it back by VT at the end of year 5. So £9k better off by selling now rather than wait to VT. Therefore if the camper is worth as little as £15k, it's better to sell it than keep it any longer!!!
This assumes the deal is regulated - if it's not the settlement will be higher.
Giving £3k to hand it back really isn't so bad - it's only another 6 months of not using it.
So if it's worth £24k now, settle for £27k (sell privately and pay an additional £3k to hand it back). The alternative is to pay another £12k and hand it back by VT at the end of year 5. So £9k better off by selling now rather than wait to VT. Therefore if the camper is worth as little as £15k, it's better to sell it than keep it any longer!!!
This assumes the deal is regulated - if it's not the settlement will be higher.
Giving £3k to hand it back really isn't so bad - it's only another 6 months of not using it.
P-Jay said:
£32000
That is a horrific mess. I've NEVER understood the point of camper vans. Look at this 'deal' for as little as £6000 a year, you can empty your own sts down a drain in the Lake District, well after you've chugged your plastic castle up there at 50mph doing 8mpg. On balance I'd rather live like a Human and stay in a nice hotel with proper plumbing.
Plastic Castle....That is a horrific mess. I've NEVER understood the point of camper vans. Look at this 'deal' for as little as £6000 a year, you can empty your own s
ts down a drain in the Lake District, well after you've chugged your plastic castle up there at 50mph doing 8mpg. On balance I'd rather live like a Human and stay in a nice hotel with proper plumbing. 
Rather unfair I feel.
Many motorhomes, including ours do around 40mpg...(diesel), you can stay on sites with serviced pitches, electric/water to hand, and really nice toilet/shower blocks for around £20pn.
Over the last five years we have visited outlying places we would never have seen staying in hotels, from Dungeness, to Lands End to the north of Scotland.
Also, motorhomes do not depreciate to the same extent as most cars.....Our old six berth Elddis bought new in 2008 depreciated around 15% when sold in 2011, compared to a typical car's 50%.
I certainly would not take a LOT of finance out to purchase any motorhome though...like with anything only borrow what you can afford, so you can sleep at night.
Gassing Station | Finance | Top of Page | What's New | My Stuff