Car Finance help
Discussion
Right, I'm a lurker and haven't posted for a while but I thought the mega brain of the internet might be able to explain some stuff to me in a non-biased manner.
My wife bought a car on Finance 3 years ago and we popped into Vauxhall to see what our options were today. Turns out she bought it pretty simply over 5 yrs and at the end of that time she owns it. When I asked if we could trade it in for a new one at the three year point they said yes but as we had C.£7000 left to pay and the car is worth C.£5000 they would have to include the extra £2000 into the new monthly payments. Therefore making then significantly larger than we wanted.
'Oh well' I thought, we will keep it for 5yrs and that is it, no real drama, nothing wrong with it anyway.
Then the salesman said we could do the other option! Because we have paid over 50% of the car's value we are entitled to ring the finance company and 'voluntarily terminate' our finance contract they would then take the car in lieu of the remaining payments and we all go our separate ways. He told us this doesn't affect our statutory rights or credit rating.
This makes no sense to my relatively small brain. A £14,500 car now has £7000 left to pay but as we all know with depreciation the car is only worth £5000 (max). He seems to think I can give the finance company the car and walk away.
Surely it isn't this simple? What am I missing?
Any help would be much appreciated
Thanks Theo
My wife bought a car on Finance 3 years ago and we popped into Vauxhall to see what our options were today. Turns out she bought it pretty simply over 5 yrs and at the end of that time she owns it. When I asked if we could trade it in for a new one at the three year point they said yes but as we had C.£7000 left to pay and the car is worth C.£5000 they would have to include the extra £2000 into the new monthly payments. Therefore making then significantly larger than we wanted.
'Oh well' I thought, we will keep it for 5yrs and that is it, no real drama, nothing wrong with it anyway.
Then the salesman said we could do the other option! Because we have paid over 50% of the car's value we are entitled to ring the finance company and 'voluntarily terminate' our finance contract they would then take the car in lieu of the remaining payments and we all go our separate ways. He told us this doesn't affect our statutory rights or credit rating.
This makes no sense to my relatively small brain. A £14,500 car now has £7000 left to pay but as we all know with depreciation the car is only worth £5000 (max). He seems to think I can give the finance company the car and walk away.
Surely it isn't this simple? What am I missing?
Any help would be much appreciated
Thanks Theo
Only got back from the dealership just now so I am hoping to catch the finance company tomorrow.
Who catches up the difference? She has given the finance company approx £7000 on a car that the finance company gave Vauxhall approx £14000 a few years ago and now we can say 'thanks very much finance company, instead of the other £7000 have a car worth £5000 instead?'
Is that really possible without really cocking yourself about?
Who catches up the difference? She has given the finance company approx £7000 on a car that the finance company gave Vauxhall approx £14000 a few years ago and now we can say 'thanks very much finance company, instead of the other £7000 have a car worth £5000 instead?'
Is that really possible without really cocking yourself about?
If the car is financed on a HP or PCP agreement and you have paid back at least half of the total amount payable, then you are perfectly within you rights to voluntary terminate (VT) the car, basically hand it back and walk away with nothing more to pay, no matter what you owe vs what the car is worth, however there may be charges depending on the condition of the car.
Check your finance paperwork, it'll be in there, it is your legal right.
Check your finance paperwork, it'll be in there, it is your legal right.
Voluntary termination is almost never a financially beneficial option
If the origonal salesman mugged you and you massively over paid, or the model's residual values took an unexpected dive then it might be worth doing but otherwise it will not make sense.
It's also possible that if the interest rate is quite high the current settlement figure is much lower than the full amount of outsanding finance and the salesman did not get a current settlement figure.
If the origonal salesman mugged you and you massively over paid, or the model's residual values took an unexpected dive then it might be worth doing but otherwise it will not make sense.
It's also possible that if the interest rate is quite high the current settlement figure is much lower than the full amount of outsanding finance and the salesman did not get a current settlement figure.
ging84 said:
Voluntary termination is almost never a financially beneficial option
If the origonal salesman mugged you and you massively over paid, or the model's residual values took an unexpected dive then it might be worth doing but otherwise it will not make sense.
It's also possible that if the interest rate is quite high the current settlement figure is much lower than the full amount of outsanding finance and the salesman did not get a current settlement figure.
You talk much crap and must be ignored. If the origonal salesman mugged you and you massively over paid, or the model's residual values took an unexpected dive then it might be worth doing but otherwise it will not make sense.
It's also possible that if the interest rate is quite high the current settlement figure is much lower than the full amount of outsanding finance and the salesman did not get a current settlement figure.
Are you suggesting the salesman got a settlement figure from a couple of years back?
It'll probably be a corsa that was sold on 0% but at an inflated price as per all vauxhalls on 0%.
O.P, vt the car and celebrate being liberated from the car!
shake n bake said:
Are you suggesting the salesman got a settlement figure from a couple of years back?
No, he's suggesting that the £7000 might the total of all the payments left to make which could well be more than a settlement figure as that figure may well be significantly less as early settlement won't incur some of the interest of taking the loan to full term.Not saying that's what happened, just that I think that is what he's suggesting.
shake n bake said:
You talk much crap and must be ignored.
Are you suggesting the salesman got a settlement figure from a couple of years back?
It'll probably be a corsa that was sold on 0% but at an inflated price as per all vauxhalls on 0%.
O.P, vt the car and celebrate being liberated from the car!
NoAre you suggesting the salesman got a settlement figure from a couple of years back?
It'll probably be a corsa that was sold on 0% but at an inflated price as per all vauxhalls on 0%.
O.P, vt the car and celebrate being liberated from the car!
I'm suggesting the salesman looked up the current outstanding finance, not the settlement figure, like i f
king well said They are 2 different things
The outstanding finance includes all the interest right up to the last payment, this is what is registered as the debt against the car and on a credit report
The settlement figure includes the outstanding capital and up to 58 days interest, and can be significantly less.
The settlement figure is hard to calculate, the outstanding finance can be easily looked up by any car dealer.
How have you only cleared half the debt after 3 out of 5 years?
I can only assume the credit was for more than the £14500 car.
Presuming that you pay £300ish a month based on your remaining balance then you originally borrowed £17000-£18000ish
Is a long winded way of saying that like others suggested, the price you have to repay includes interest. Vauxhall may only give you 5k but you can bet they'd sell it for a lot more.
If you're looking at getting out, get a settlement figure, sell it privately, you'll get more money.
I can only assume the credit was for more than the £14500 car.
Presuming that you pay £300ish a month based on your remaining balance then you originally borrowed £17000-£18000ish
Is a long winded way of saying that like others suggested, the price you have to repay includes interest. Vauxhall may only give you 5k but you can bet they'd sell it for a lot more.
If you're looking at getting out, get a settlement figure, sell it privately, you'll get more money.
ging84 said:
The settlement figure is hard to calculate, the outstanding finance can be easily looked up by any car dealer.
No, it can't.There's been replies from 3 car salesman in here so far and I assure you they'll agree with me that we have no access to people's finance agreements without their explicit say so and it is actually easier (if the car was financed with one of the companies used by us) to get a settlement figure than to get a balance.
If the car was bought from vauxhall, financed though vauxhall and the OP visited vauxhall then there is a 99:9% certainty the salesman for a settlement figure not a balance, unless he is a complete retard.
No dealer calculates settlement figures themselves, all we do is call a (normally automated) number or visit a finance system online and enter the customers agreement number/dob/maybe something else and hey presto, settlement.
I very recently (last week) got rid of our 14 plate juke. We had around £1500 of negative equity as seems to be the norm.
We assessed all of our options, they were:
1. Hand the car back to Nissan finance,paying any additional milage and damage to the car. Total cost to us c.£2000 due to lots of excess mileage and damage (OH likes hitting things)
2. Carry on finance for 2 years and buy the car
3. Sell car privately and settle finance, we sold our car to we want any car. All in all the service was straight forward and we got a satisfactory price. Total cost to us c. £950
I would definitely asses your options as one should be a stand out favourite. For us due to the mileage being double our agreed amount and the car sporting damage to 2 wheels, bumper and various parking dings it wasn't a sensible option to hand the car back as charges were quite harsh.
We toyed with keeping it but it would have cleaned both accounts and left us with a pittance.
So the final option (3) was to sell the car, i doubt it would sell privately although i may be niave so we decided car buying services would be the best bet. There initial offer was very good £8300 Vs the £8400 finance owed but upon assessment the final offer was £7550 which we sold for leaving us just under £1000 out of pocket.
Hope this helps
We assessed all of our options, they were:
1. Hand the car back to Nissan finance,paying any additional milage and damage to the car. Total cost to us c.£2000 due to lots of excess mileage and damage (OH likes hitting things)
2. Carry on finance for 2 years and buy the car
3. Sell car privately and settle finance, we sold our car to we want any car. All in all the service was straight forward and we got a satisfactory price. Total cost to us c. £950
I would definitely asses your options as one should be a stand out favourite. For us due to the mileage being double our agreed amount and the car sporting damage to 2 wheels, bumper and various parking dings it wasn't a sensible option to hand the car back as charges were quite harsh.
We toyed with keeping it but it would have cleaned both accounts and left us with a pittance.
So the final option (3) was to sell the car, i doubt it would sell privately although i may be niave so we decided car buying services would be the best bet. There initial offer was very good £8300 Vs the £8400 finance owed but upon assessment the final offer was £7550 which we sold for leaving us just under £1000 out of pocket.
Hope this helps
Mercury00 said:
Can you give the car back on HP too? I thought it was only PCP. I've read through my HP agreement and it makes no mention of voluntary termination, whereas in the past my PCP paperwork always clearly stated that it was an option.
Yes you can, as long as it's definitely HP you have.As has already been suggested. Getting involved in ANY manufacturer backed finance will ALWAYS be the least sensible option. Any 0% finance offer is based on the punter paying the FULL retail price for a vehicle. 2 or 3 years down the line - you realise what a stupid idea it was buying into this scenario.
People tend to be easily taken in by the salesmans schpeel and it is not difficult to "suck" people into getting involved in a deal that seems to them the right way to go. More often than not - it isn't.
If you want to buy a car, go visit your bank and negotiate a good rate for funding a car. (The bank has NO interest whatsoever in what you are using the money to fund. They do NOT own the car, as a finance company would, and they have no say as to what you do with the vehicle, You COULD sell it the week after you bought it - it is YOUR car). A bank WILL cost more than a manufacturer backed finance scheme, but overall - spread over 2 to 6 years, you may be, at best, no worse off. You are now in a much better position to negotiate a discount on the car you desire.
All manufacturers rely, very heavily, on the ignorance of Joe Public. The percentage of people that fail to do their research, when buying a car, is the one thing that keeps the manufacturers in business. "Bu*lsh*t Baffles Brains", as one of my employers once used to constantly say.
People tend to be easily taken in by the salesmans schpeel and it is not difficult to "suck" people into getting involved in a deal that seems to them the right way to go. More often than not - it isn't.
If you want to buy a car, go visit your bank and negotiate a good rate for funding a car. (The bank has NO interest whatsoever in what you are using the money to fund. They do NOT own the car, as a finance company would, and they have no say as to what you do with the vehicle, You COULD sell it the week after you bought it - it is YOUR car). A bank WILL cost more than a manufacturer backed finance scheme, but overall - spread over 2 to 6 years, you may be, at best, no worse off. You are now in a much better position to negotiate a discount on the car you desire.
All manufacturers rely, very heavily, on the ignorance of Joe Public. The percentage of people that fail to do their research, when buying a car, is the one thing that keeps the manufacturers in business. "Bu*lsh*t Baffles Brains", as one of my employers once used to constantly say.
datum77 said:
As has already been suggested. Getting involved in ANY manufacturer backed finance will ALWAYS be the least sensible option. Any 0% finance offer is based on the punter paying the FULL retail price for a vehicle. 2 or 3 years down the line - you realise what a stupid idea it was buying into this scenario.
People tend to be easily taken in by the salesmans schpeel and it is not difficult to "suck" people into getting involved in a deal that seems to them the right way to go. More often than not - it isn't.
If you want to buy a car, go visit your bank and negotiate a good rate for funding a car. (The bank has NO interest whatsoever in what you are using the money to fund. They do NOT own the car, as a finance company would, and they have no say as to what you do with the vehicle, You COULD sell it the week after you bought it - it is YOUR car). A bank WILL cost more than a manufacturer backed finance scheme, but overall - spread over 2 to 6 years, you may be, at best, no worse off. You are now in a much better position to negotiate a discount on the car you desire.
All manufacturers rely, very heavily, on the ignorance of Joe Public. The percentage of people that fail to do their research, when buying a car, is the one thing that keeps the manufacturers in business. "Bu*lsh*t Baffles Brains", as one of my employers once used to constantly say.
Taking a 0% secured loan is worse than taking out an unsecured loan that has interest applied ??????People tend to be easily taken in by the salesmans schpeel and it is not difficult to "suck" people into getting involved in a deal that seems to them the right way to go. More often than not - it isn't.
If you want to buy a car, go visit your bank and negotiate a good rate for funding a car. (The bank has NO interest whatsoever in what you are using the money to fund. They do NOT own the car, as a finance company would, and they have no say as to what you do with the vehicle, You COULD sell it the week after you bought it - it is YOUR car). A bank WILL cost more than a manufacturer backed finance scheme, but overall - spread over 2 to 6 years, you may be, at best, no worse off. You are now in a much better position to negotiate a discount on the car you desire.
All manufacturers rely, very heavily, on the ignorance of Joe Public. The percentage of people that fail to do their research, when buying a car, is the one thing that keeps the manufacturers in business. "Bu*lsh*t Baffles Brains", as one of my employers once used to constantly say.
What planet are you on?
The manufacturer I work for does not stipulate that a car needs to be full retail price to qualify for 0% so I don't know where you are hearing this, I've done 0% deals with discount applied before.
Regardless of your profession or experience in the motor trade, you cannot seriously think that taking an unsecured higher rate loan is better than taking a secured interest free loan.
datum77 said:
As has already been suggested. Getting involved in ANY manufacturer backed finance will ALWAYS be the least sensible option. Any 0% finance offer is based on the punter paying the FULL retail price for a vehicle.
Absolute rubbish. You can negotiate any discount you like and then apply for their finance. They are legally not allowed to alter the sales price depending on whether or not you are using their finance.This is precisely why you see a "deposit contribution" rather than a "discount" (as well as reasons concerning the used market).
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