A couple of questions, first:
1. What's the car? What is it, how old, in what condition, what mileage and specification?
2. How much mileage has it done?
3. Why do you want rid?
4. How much do you owe on it?
If there is a hire purchase agreement in force (i.e., title to the vehicle only transfers to you once you have made all the payments) then your liability can never exceed 50% of the total credit price under the Consumer Credit Act, so you can voluntarily hand back, although naturally finance companies are not keen for you to do so.
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Hi DavidHM
1. The vehicle is an Isuzu Trooper Ctitation 3.0TD. Its '52 plate and the add on's are tinted window's, seven seats, tow bar, side running boards, Mt. Gold, cd/radio, air con, heated seats. good condition, cloth interior no tears
2. its has done 63,000 miles.
3. It no longer serves the purpose it was intended for which was towing a trailer that we now no longer have.
4. a guesstamat is approx 14,000, purchase price was 26,000 + interest.
we paid 3,600 deposit and have made 30 payments, hope that helps, why did you want to know?
many thanks
madwoman
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thanks martin123
if we get a chance we'll pop down 2 cab in the morning and get their lowdown on this, only trouble is our local cab is always so busy and you have to wait such a long time to be seen.
thanks
madwoman
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Sorry if it sounds obvious but I really wanted to make sure that the maths add up here. The reason is that I wanted to make sure that you weren't responding to a 'stitch up' valuation on the car, so that whilst a hand back might be better than doing the deal, it might not automatically have been in your interest.
A lot of people have said in the past that one of the advantages of hire purchase, as opposed to a personal loan, is that you can hand back after you have made half the payments. The trouble is that frequently, you will not be in a negative equity situation at this stage if you buy the right car at a low price and a low APR.
This car is worth up to about £10k in the trade and maybe £11k as a private sale.
You have so far paid approximately £18k on the car (I'm guessing at the APR and the length of term, but if it's five years then your payments are approximately £480 a month at 10.9% APR). If it's a PCP then the total credit price may be different, of course. A rough Excel calculation making an assumption about the APR suggests you owe about £12.5k, so you are in negative equity but only really due to the high mileage on the car.
Given that the car no longer suits your needs, will have relatively high running costs, you're obviously in an okay financial position to have made the payments, and actually in (a relatively small amount) of negative equity, then I would be looking to do a hand back in your situation but it's not automatically the answer for everyone.
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As stated you can do this no problem there. Beware of people telling you you can't. If anyone does tell them to write what they say down on headed paper and sign it. They change their tune pretty quickly then.
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There's no edit button and I missed your guesstimate of £14k outstanding on the loan first time round - all the more reason to hand the car back if you can (i.e., presuming it is a hire purchase/conditional sale where title in the car remains with the vendor/finance company until the agreement is settled).
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Hi DavidHM
thanks very much, you certainly know your onions. The total of the finance with all the inclusions such as credit facilty fee, completion fee & interest came 31,437.21 the APR is at 9.8% and our monthly payments are 554.38 so we sure we're past halfway mark just by using simple maths.
hubby has purchased a luton to do the job of the trailer now and yesterday we went car hunting with a view to trading in the trooper and my corolla for a new car, they said 8,000 book price for the trooper, cheeky beggars and my car is an 02 plate and they said book price is 4,700. with the trooper back to the finace company and only my car to trade in thats definately a better position now.
once again many thanks for your help, will let you know what the outcome is tomorrow after we tell finance they can have their goods back.
one final thought, is there any set procedure we have to go through to do this or is it as simple as phoning them and saying come get your goods we don't want it anymore.
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In that case, it appears that your finance deal is over 4 years (I don't have a proper APR calculator so I'm doing some pretty rough calculations). I am assuming, of course, that there is no element of credit protection insurance or non-cancellable extended warranty in the payments.
Using the same rough calculations, at month 30 you probably now owe only £9,500 or so - i.e., less than you would get if you sold the car privately. The £8k "book value" might not be *that* bad if it's a three door with a manual box but is very low for a five door automatic. Stick it on eBay or in the AutoTrader and you should see yourself in some positive equity - up to £1,500.
You could also do the same with your car as well and find out what you might get for that. Again, the same questions apply - make/model, mileage, specification, colour, condition. If the dealer was only offering £8k on the Trooper, this should easily be £6k in a private sale, if you're willing to go down that road.
Finally, what about the new car? www.nrock.co.uk is about the cheapest for the finance - 5.7% APR (don't even bother asking about flat rate - the APR is the only rate that matters). If you are then truly a cash purchaser, you'll be able to look at a broker with a minimum of hassle and you may even shave off another couple of thousand there.
Even if you're not getting truly stitched up, you might still save £2,700 by selling the two cars, £2k on the new one and £1k on the finance.
(Obviously if you do sell both cars at once, be aware that it's a common tactic for people to phone up and say "I'm ringing about the car" so that a trader will have to say "Which one?" thereby smoking out undeclared traders. That might be useful information for you.)
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DavidHM
the finance is definately over 5 years on the trooper and its 5 doors
my car only has 17,000 on the clock and thats 5 doors too. we shall be speaking to the dealership and see if they can make a better offer than that for part-ex, its in immaculate condition.
didn't think you could sell goods with finance still running on them.
Anyways in the morning we shall be intouch with the finace company and tell them to come get the trooper.
thank you again for your help
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Sorry, but your numbers don't add up.
If your monthly payment is £554.38 and there are 60 payments then the payments alone are £33,262.80. The total credit price, with your deposit, is £36,862.80.
I can only conlcude that there is some kind of payment protection insurance involved and that is why the outstanding amount is so high and that therefore, assuming you do owe £14k, you may not be able to escape this finance agreement completely as you could still have approximately £2k of payment protection outstanding. If you have made 30 payments then you are now past the half way stage of course, but the PPI is not taken into account by the handback calculations. (Actually, perhaps the APR isn't 9.8% - perhaps it's 9.8% flat rate finance and an APR of ~18.5%, which would explain the payments).
You are right that you can't sell the car with finance owing on it. If the buyer is willing to make out a cheque to the finance company for the balance owing, and the remainder to you, that is one solution, but the easiest solution is for you to borrow cash to pay off the finance agreement and then use the cash from the sale towards the new car. Obviously this is not necessary if you do owe more than the car is worth.
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