Car FInance Donmarkmitch

#1
Hi need some advice for my son. He purchased a car a year ago with the car company's finance. He has been paying every month for the year with no missed or late payments. He has 3 options with this finance 1. he can pay his payments for 3 years and give the car back. 2. pay for 3 years and then get another newer car. 3. or pay back over 3 years keep the car and continue with remaining outstanding balance. Which is all clear.



His circumstances have now changed and he will be emigrating to work in Australia at the end of August. When he rang the company to ask if the car can be transferred into our names (Mum and Dad - named drivers), he was told no as they would have to do credit checks! He was also told that if he pays of 50% of the loan/credit he can return the car and terminate his contract, or he can return the car early cancel the contract but he will get a bad credit rating.

When he asked what percentage he had already paid bearing in mind this is a 3 year contract and has paid over a year he was told 27%, which when he said surely if its a 3 year contract and I already paid over a year it should be 33% he was told no as everybody pays different amounts.



They also said that he can sell the car and then repay the balance which we was happy to do, but would he have trouble selling it as it would show that there was finance still owed?



Please can you help with this situation, to say that this is causing no end of stress and confusion is an understatement.



Many thanks

#3
Your son could 'keep' the car and carry on making payments. You could take over the use of the car (as you have indicated that you wished to do so). All you need do is arrange to make the monthly payments from your account rather than his.



Rob

#4



He was also told that if he pays of 50% of the loan/credit he can return the car and terminate his contract, or he can return the car early cancel the contract but he will get a bad credit rating.

When he asked what percentage he had already paid bearing in mind this is a 3 year contract and has paid over a year he was told 27%, which when he said surely if its a 3 year contract and I already paid over a year it should be 33% he was told no as everybody pays different amounts.


Sounds like your son has a PCP with a lump sum payable to keep the car after 3 years payments. The 50% threshold to Voluntary Terminate is 50% of the Total Amount payable which includes the final lump sum payment not 50% of 3 year's monthly payments. Hence your son only being at 27%. The 50% figure will be stated in the finance docs somewhere.

#5
As Nearlyold says, on PCP the 50% is the TOTAL amount including the balloon payment and any interest



So say you have PCP for 15k on 0% finance



You pay £500 deposit and have a £5000 GMV, you are borrowing £9500.



Let's say £263.66 a month over 3 years (9500/36)



263.66*12 = £3166.66 + £500 deposit = £3666.66 / £15000 = 24%



263.66*24 = £6333.33 + £500 deposit = £6833.66 / £15000 = 45.5%



As you can see you need to get fairly into the contract to get close to 50% - on those figures you need to be 27 months in to just get over the 50% mark



You'll have to look at the total amount and how much he has paid until he can VT it



Otherwise sell it (problem private as people who do a HPI check and see it's on finance can be put on) so you may need to bite the bullet and keep paying or flog it to someone like We Buy Any Car and pay the difference

#6
The issue you'll have is that there is probably negative equilty left on the car as he's only had it a year. What sort off deposit was put down? You can sell the car with finance you just need to be upfront about it, easiest is via a webayanycar type company but shop around as prices vary. Be prepared to fill in the gap though as I doubt you'll get the full settlement figure from selling the car alone...

#7
You could

1) get a settlement figure from the finance company



2) get a personal loan for that amount



3) pay off the car finance with the loan funds. The car will now be yours, free of finance, to sell or keep as you please.

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