How does car finance work in terms of buying then selling

[AlexNJ89]

Struggled to Google this topic but it probably occurs 100x per day in this country alone.

I'd like to buy a car before I've sold my current car, I'd need some extra finance as the car is more expensive than the value of my current car.

But if I loan the entire amount for the new car then I pay more in interest.

Is the only answer to sell my car first and have to be carless until I find the right car?

Or is there some kind of product where they allow you to pay back a chunk within a month and not get charged interest?

I'm new to car finance so apologies if it's a really stupid question!

[Chris32345]

Buy car for full value sell current car and use money to pay a chunk of the loan off you pay less interest that way

Assuming you on about hire purchase finance anyway

[jjr1]

You could just ask the dealer you are buying your car from for a part ex value? They will then pay off your finance debt whilst setting up your new finance deal.

[Nickp82]

If you take a low apr loan for the new car and then pay off a few months later it will cost peanuts really.

As you may or may not know, you are only charged interest to date plus maybe a month or two additional when settling a loan early, not the full amount for the term.

[james_gt3rs]

Dealer will sort it all out, you just get rinsed on PX value as always. Price of convenience...

[AlexNJ89]

Nickp82 said:

If you take a low apr loan for the new car and then pay off a few months later it will cost peanuts really.

As you may or may not know, you are only charged interest to date plus maybe a month or two additional when settling a loan early, not the full amount for the term.

Thanks, no I didn't realise you were charged interest to date. I thought it was a fixed fee on the loan.

This relieves a lot of pressure as it means I can run two cars for a little longer which I'd wanted to do.

Thanks for the replies so far.

(It is Hire Purchase yep)

[AlexNJ89]

Nickp82 said:

If you take a low apr loan for the new car and then pay off a few months later it will cost peanuts really.

As you may or may not know, you are only charged interest to date plus maybe a month or two additional when settling a loan early, not the full amount for the term.

Thanks, I didn't know this!

[AlexNJ89]

Oh last question, do your monthly payments get reduced if you pay off a lump too?

[PBCD]

AlexNJ89 said:

Oh last question, do your monthly payments get reduced if you pay off a lump too?

As I understand it, you can choose whether to reduce the payments *or* reduce the term;
that's certainly how it works with the HP product from BMW/Mini, at least.

[AlexNJ89]

PBCD said:

As I understand it, you can choose whether to reduce the payments *or* reduce the term;
that's certainly how it works with the HP product from BMW/Mini, at least.

Thanks!

Thanks for all the responses guys, learned a lot

[AlexNJ89]

I'm off to go look at a private car tomorrow. When should I look at applying for finance?

I'm assuming there will be some ID and document checks which could take a couple of days.

Do I have to get the loan approved then they transfer the money to my bank to buy the car?

Thanks