Paying off car finance with a bank loan
Discussion
Hello All,
Currently doing some serious 'man maths' in order of swapping a 420d M Sport for a Caterham and a run around (Abarth, Fiesta etc tbc). I currently have the Bimmer on finance on a decent rate of 6.9%. I'm looking at taking out a loan, hopefully equal/less than that rate, buying the 420 outright and then selling it to buy the prior mentioned.
The maths is currently looking like this: Settlement £18k, Car value £17k, Caterham £14k, Run-around ≈£4k, Insurance £1k, Loan amount £20k.
I'm after some advice on what the best order option would be to go about the above. Take the loan, explain its to pay off finance and not double my debt, pay off the car and then sell and buy the Cat and Abarth. OR would it be to give the car back pay the negative equity and then go about taking out a loan etc?
My motives behind this all being A). Man maths B). I want a Caterham and always have C). Financially in the long run I will be better off, 2.5yrs time when PCP ends I give the car back, have spent thousands on finance and nothing to show and no car. OR 4yrs time I've paid off the bank loan and have a Caterham that's lost maybe £1-2k tops and a run around that's done the same due to low starting value. All in all still leaving me with 2 motors collectively worth ≈£14k and no more monthly payments.
Any advice welcome
Currently doing some serious 'man maths' in order of swapping a 420d M Sport for a Caterham and a run around (Abarth, Fiesta etc tbc). I currently have the Bimmer on finance on a decent rate of 6.9%. I'm looking at taking out a loan, hopefully equal/less than that rate, buying the 420 outright and then selling it to buy the prior mentioned.
The maths is currently looking like this: Settlement £18k, Car value £17k, Caterham £14k, Run-around ≈£4k, Insurance £1k, Loan amount £20k.
I'm after some advice on what the best order option would be to go about the above. Take the loan, explain its to pay off finance and not double my debt, pay off the car and then sell and buy the Cat and Abarth. OR would it be to give the car back pay the negative equity and then go about taking out a loan etc?
My motives behind this all being A). Man maths B). I want a Caterham and always have C). Financially in the long run I will be better off, 2.5yrs time when PCP ends I give the car back, have spent thousands on finance and nothing to show and no car. OR 4yrs time I've paid off the bank loan and have a Caterham that's lost maybe £1-2k tops and a run around that's done the same due to low starting value. All in all still leaving me with 2 motors collectively worth ≈£14k and no more monthly payments.
Any advice welcome
Is it a proper PCP deal with 2.5 years left on it? So I assume you have had the car for 6 months?
Personally I'd find the cash difference between the BMW's outstanding finance and what you can get for it selling it second hand as you'll get the most back from a private sale. Then start a new loan for the two cars you actually want.
If you can't afford the difference between the outstanding finance and the actual obtainable value of the car then you should wait till you can. Borrowing to pay off the difference is just adding more negative equity to the two new cars and digging yourself in deeper in debt.
Don't forget that two cars is two lots of running costs, insurance, tax, etc. So this needs to be budgeted for. If you can't afford a separate loan to buy a Caterham or cheaper Locost 7 without getting rid of the BMW then it sounds like you need to be very sure you have the spare cash to pay the running costs.
Personally I'd find the cash difference between the BMW's outstanding finance and what you can get for it selling it second hand as you'll get the most back from a private sale. Then start a new loan for the two cars you actually want.
If you can't afford the difference between the outstanding finance and the actual obtainable value of the car then you should wait till you can. Borrowing to pay off the difference is just adding more negative equity to the two new cars and digging yourself in deeper in debt.
Don't forget that two cars is two lots of running costs, insurance, tax, etc. So this needs to be budgeted for. If you can't afford a separate loan to buy a Caterham or cheaper Locost 7 without getting rid of the BMW then it sounds like you need to be very sure you have the spare cash to pay the running costs.
The appeal of giving the car to a dealer or trading it in for the run around was to negate a period of no car. It also saves having to deal with the faff of selling privately.
What prompted this all was realising the monthly costs of the BMW equal that of having two cars, the insurance for a Cat and Abarth is £400 each, my bimmer is £1200.
Would you say it’s best to return the car first pay the negative equity (£1k which is affordable) and then take the loan to buy the others then?
What prompted this all was realising the monthly costs of the BMW equal that of having two cars, the insurance for a Cat and Abarth is £400 each, my bimmer is £1200.
Would you say it’s best to return the car first pay the negative equity (£1k which is affordable) and then take the loan to buy the others then?
Also yes I’ve had the car for six months, bought as a motorway muncher when fortnightly 400mile round trips were occurring and now I’m no longer doing them I’ve slashed my annual mileage and my pcp is for a far higher mileage than I’ll reach so I’m paying over the odds on my monthly payments.
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