Refinancing - please explain jshev


So I recently bought a new car on the following figures -

5 year HP.

Full payment - £9000

Monthly payment - £150

If for example over the 5 years, I think I would like a new car, how would I go about being able to trade this one in? and what would be the best point in doing so? and how would I do it?

I am not regretting it, I love the car but just curious as to how this works.

Many thanks :-)

You can trade it in at any time, however you are going to be in negative equity for many years on a 5 year finance deal.

On a 3 year deal break even is usually around 18 months to 2 years in, from this point any equity in the car can be used towards the deposit for the next.

On a 5 year deal, it could be 3 years or more before you get any equity at all. You can still trade in, but you will need to pay the remainder of the outstanding finance on your current car in addition to the cost of the new car.

I would never do finance over 5 years on a car that I would think that I maybe changing after 18 months or so, simply because you could well at that point still owe most of the original purchase price, but the car will have depreciated significantly.

After 5 years your £9K car may only be worth 1-2K at best.

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