"£750 monthly payments for the car and the insurance"
How much are the car payments and how much for the insurance?
What's the interest rate on the car payments?
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Phil
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Sorry, don't know much about this, but why can't he sell it privately?
My first thoughts were , sell it privately, and take out a personal loan for the remainder to pay off the finance company, then start afresh with something "within reach".
Has he been to his bank for advice? Any helpful parents around!!? Or rich mates???!!
Sorry if this is "crazy" and no help.
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Phil
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Thanks for the link Dalglish.
mk124 - he's a 21 year old lad with not a penny in savings. He doesn't want a Focus and he doesn't want practicality - he just wants to minimise his monthly payments as much as possible! I see what you're saying about there not being much difference between the two - finance wise.
I maintain to this day that the TT is girly which he denies. I think even he'd admit to an MX5 being a hairdresser's car though!
Phil,
he has no idea what the interest rate is other than that fact that over 5 years, he'll be paying double what the finance figure is.
Car payments roughly 550 a month with insurance taking up the rest.
The finance comapny have said he can't sell it privately. I assumed this was the norm. It would be easy if he could.
Don't think he's been to the bank for advice but his parents have been helpful in as much that they've been the one paying for it for the past 3 months! I'd love to help him but sadly my budget stretches to an odd pint and maybe a couple of pies!
Don't apologise for any ideas. You're the one trying to help me.
Thanks for the advice,
Adam
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it may be worth his while (his parent's while?) getting a low rate personal loan to settle the HP, and hopefully reduce the monthly outgoings. This should also allow him to sell the vehicle whichever way he chooses afterwards.
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This could be a blessing in disguise. Without getting the slide rule out, the APR must be close to 40%. By settling early he could save most of this usurious interest. Can he find a way to refinance at a lower rate - or will his dad stand in his shoes, raise a loan for the settlement figure at a much lower rate, they can then sell the car privately, buy a car that your pal can afford, and pay down the loan with what's left over. He should then tip up his wages to is dad until what remains of the loan is paid off, then start again with a less feckless attitude (and I don't mean that unkindly).
How's that?
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I think Manatee has the answer. When I bought my current car I had to take a bit of finance at a ludicrous rate because my credit history was (ahem) patchy. A year down the line, my bank offered a loan at 1/3 of the rate, so I took that, paid off the HP leaving me 1. owning the car outright 2. paying much less per month.
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Sorry, don't know much about this, but why can't he sell it privately?
Because if it's on HP which it sounds like it is the car isn't his to sell until he has made the final payment.
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Wow - thanks a lot Gents. I really do appreciate it. As does my mate.
I'm afraid I can't answer too many of your points yet as I don't know the details. I do know he hasn't been to the bank yet so I'll speak to him tomorrow about it and come back with some more info.
Again, thanks very much for all the continued help.
Adam
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"the car isn't his to sell until he has made the final payment."
OK, didn't realise that - never been a great one for HP - usually found other ways of getting finance (cheaper?).
Presumably there are laws that prevent him making a payment one month, flogging the car privately during the following month and paying off the finance before actually transferring ownership?
I, (and probably you!), often wonder how I made it this far in life without knowing so many of the things I find out on this site!!
I would still propose a visit to friendly(!) bank manager, explain situation and ask for a short term loan to get him through this. Does he own property? Any chance of a re-mortgage or loan against mortgage? - I did have to do that once! Also took out a "save and borrow" account at my bank - I agreed to pay a certain amount per month and they lent me 50 times the monthly payment. ie, for £400 a month I could borrow £20k (I actually borrowed much less but that was the principle of the account) and I could pay it off at any time without penalty. Very useful when my kids were at Uni to cover short term amounts for fees and accommodation until their loans came through! Seem to remember that interest rate was quite reasonable (6% ish??) Was with HSBC.
Hope these aren't totally useless suggestions - I'm sort of thinking aloud - not always a good idea.
Better to keep your mouth shut and be thought a fool than opening it and be proved a fool??
Regards
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Phil
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Phil, you're an absolute gent.
I'll relay your suggestions to my mate tomorrow.
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Only a guess, but does anyone know ...say if he is a limited company? If so, I think you can just wind it up and give the car back as you have limited liability.
or
About 5 years ago, a freind of mine was in exactly the same situation except he was 23. He stopped paying the installments due to his Dad's company packing up thus losing his job and they sent a letter saying they would reposess the car if he didnt pay. He had stopped using the car and had borrowed one from his Father. He waited for the inevitable - BMW Leasing to come and pick it up, they never did. It was on his drive gathering filth and moss. Years passed, and the end of the lease came up and they appeared at his Father's house with a tow-truck (as that is where he lived when he bought it) and his Dad sent the truck to his son's house and the driver picked it up, the driver said it happened all the time with BMW as they're bad with the paperwork!
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At the risk of sounding like Mr Grumpy, I'd suggest that since his finances are a bit up and down, he should reduce his outgoings to the absolute minimum until he's got a) a financial cushion and b) a steadier and predictable income.
I'd suggest he agrees a repo figure with the finance co., gets (either direct or through his parents) a low rate loan for the outstanding amount so he can pay that off immediately, and that he he then works his way back up the car ladder using cash, not loans. If that means buying a banger, saving up, and going up slowly, so be it, but he won't have the risks he's got now.
Believe me, I've been a gnat's whatsit from losing my house, wife, kids the lot, through taking on loans and finance that I couldn't afford when things turned down.
The best mates are the ones who tell you like it is.
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As others have said, he needs to trade down to something much cheaper. If he still wants a 'flash' car then consider an older Japanese sports car - cheap and reliable. A '96 Mitsubishi FTO can be had for £5k and they are dead reliable; ditto an MR2. Insurance will be a bit steep, but less than for the TT (try AON, Sky or A-Plan).
Hopefully this will all be a useful lesson to him. I'm often amazed at how people these days live on a financial knife edge - I couldn't. A lot of people put too much store in the car they drive and literally 'beggar' themselves in the process. There's nothing worse than a car that makes you poor.
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Has he been in debt before - is this a recurring problem ?
If so, don't help him.
The sooner they learn some financial reponsibility, the better, preferably before they buy a house and get a family.
I'll bet he knows how to get out of this hole, but is prepared to let his dad help him out, and keep his flash car.
The advice is always the same - swap the expensive car for something cheap to own. Work at any jobs you can get and pay off your loans - don't extend the loan period.
If he doesn't want to listen to the obvious, he should take the consequences and learn the hard way.
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Got it in one, Aprilia. They have to have everything now, these days, don't they?
And if he gets, say, an FTO or a Prelude at least people won't snigger behind his back...
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Most car finance, other than a good rate personal loan, is a disaster. People borrow £15K to buy a car, at the end of 3 years it is worth £7K and they have paid over £20K for it. Remember the unlamented Y*S car credit? They had APRs of well over 20%. Many people are seduced by the £28 a week aspect and ignore the "for 7 years" aspect!
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Adam,
Question: how much did the TT cost on Day 1?
If your mate bought the car as part of a Hire Purchase agreement, he ought to have two options open to him:
1) Pay half the amount of the total hire purchase price (if the total of instalments already paid have not reached that amount) and return the goods to the owner, or
2) Buy the goods earlier than planned by paying the difference between the amount already paid and the total hire purchase price.
That, at least, is the law as it applies in Ireland - though I can't find a reference now, I'm sure similar rules apply in the UK. In either case above a penalty charge may apply. If its not a HP deal, though, I'm unsure what the situation is. Can anyone else advise?
If it is possible for him to buy the car outright, then he can sell it or trade it in against another one. Even if he keeps the car, the rate payable on a bank loan should be much lower. Considering the TT is a desirable car, the best course of action may well be to sell it, clear most of the loan and get something cheaper to buy and run.
Good luck to him getting it sorted out.
- Gromit
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Maybe there?s somewhere he can go to for advice on his business, how to promote himself, increase his client base, business insurance, advertising or whatever. Being self-employed is fantastic when everything?s hunky dory, but when it goes bad... oh man. I know all about that. I went self employed in 97 and made nearly 100k a year for four years - fantastic years. When those planes hit the towers my work (advertising) dried up overnight, plus divorce, paying a morgtage for a house I wasn?t living in, tax bills from previous year and by then an expensive cocaine habit - almost wiped me out. And it?s no fun falling that far.
He?s really got to start living within his means. Get sensible. Sensible car, sensible repayments. Get a cheap XJS for weekends and insure it classic. Concentrate on his business and the other things will come in time.
Lecture over, pour me a drink.
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In the old days,you could sell the car to someone(with the agreement of the finance co.) who would take over the repayments.
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Champagne tastes,brown ale money,get rid of the Audi,settle the finance,buy something he can afford,learn the lesson,easy really.
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He sounds like the perfect reason why personal finance should be on the national curriculum.
Why do lenders never seem to say no?.......... Sorry stupid question.
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Dave? you forgot the rent boys and call girls?
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TourVanMan TM < Ex RF >
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I certainly did my bit for the Eastern European red light district
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It ain't worth £15K, I would think to shift it it's nearer £13K and no-one will buy it private till the finance is settled, which he can't do.
So he has to trade it. If he surrenders to the finance co, they will put it on the block and it will make basic trade, which ain't £12.5K unless it's really low mileage and perfect (it's four years old and about to be replaced).
He's a bigger fool if he thinks it's a better idea to take out more finance on something else that's about to be replaced (Type R) and costs a packet to insure. Plus if he can't afford the finance now, how's he going to afford £15K of finance (£10K car plus £5K debt) - sorry, but he's not going to and he needs telling that - tomorrow is not always sunnier. You start this route and it ends with bankruptcy unless you are careful.
I would love to know what he was doing paying £18K for a 3 and a half year old TT for anyway - mate part-exed his 225 20K in early 2005 and only got £15.6K for a 52 plate facelifted car then.....
[sorry to be blunt, but someone had to say it]
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THanks very very much for all the help and advice.
There got to be so many replies I just directed him here to read them all. I'll be seeing him later so I'll let you know what he thinks and what he's trying to do.
I do know that he's gone down the bank idea since I showed him one of the posts and that's a no go.
Thanks again for all the help - I'll get back to you shortly.
Cheers,
Adam
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This is what the Office of Fair Trading has to say on ending an HP agreement early :
www.oft.gov.uk/Consumer/Hire+purchase/default.htm#...g
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