I've got what is probably a simple question to answer, but the Citroen dealer I went to was a bit unclear and all over the place!
I have a Renault Laguna 1.9 dCi Privilege Estate. I've had it 2 years and bought it on a 48 month finance deal from Cars 4 Staff (Lloyds Car Select). I was just finishing Uni when I purchased the car, hence the small deposit and 4 year payments.
The Laguna is a nice car but we've put miles on it quicker than expected due to a variety of different events and circumstances. It now has 74,000 on the clock and I'm worried about all the potential things that can go wrong - just read any motoring forum to see problems with this car!
I have £3200 left to pay and trade-in value I've been offered is around £2700. My question is this, does the £2700 that the dealer pays to Cars 4 Staff also count as a deposit on a new car or do I have to find that separately?
I'm looking at Citroen Nemo Multispace (how uncool!) or the new C3 Picasso.
Made non-model specific and amended the thread title, Rob
Edited by rtj70 on 09/06/2009 at 11:01
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The trade in value does not even cover the outstanding finance. So in addition to finding the finances to clear the finance (there may also be a fee for terminating the agreement early) you will also need to find the deposit for the new car.
Basically you still owe more for the Laguna than it seems to be worth.
Edited by rtj70 on 09/06/2009 at 10:58
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Basically you still owe more for the Laguna than it seems to be worth.
In which case it would be better to just hand back the Laguna to the finance company under the 50% rule. The guy selling you the new car should be able to advise - it's a normal thing to do especially for people who put a lot of mileage on their cars, and, despite what some people may tell you, does not affect your credit rating.
It's possible that the finance company may pursue you for some costs if the car is in worse condition than would be reasonable for its age.
Edited by Bill Payer on 09/06/2009 at 11:15
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I think I might approach your dilemma in a different way. You say you like the car and it may well continue to give good service for long enough to pay off the loan or indeed much longer. It is reaching a point in its value where depreciation is slowing down now. In other words if you keep it for say, another couple of years, it will not have lost anything like as much as a newer car would in the same period. Granted, there is a higher risk of problems perhaps but you could look into getting a decent warranty on it if it doesn't already have one.
Given what you have told us I think you should probably keep it a bit longer. Funnily enough at this stage of its life it is probably going to give you better value than it ever has provided it still suits your motoring needs.
Edited by Humph Backbridge on 09/06/2009 at 11:19
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Bill, I take issue with your suggestion that the OP VTs the car. To me, whilst legal it is immoral. It's like the MPs who are claiming expenses for everything they are legally entitled to, irrespectve whether it was wholly & necessary for the job. You borrow the money you should repay it.
However, adt might still want to consider this so you would need to check whether the finance agreement is a HP or a personal loan; if the latter you won't be able to VT (I'm pretty sure).
Some dealer's finance house will lend you way in advance of the new car purchase price so you still may be able to change cars without any cash deposit
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It will cost me just over £3200 to cover the personal loan on the car and I can end the agreement with full payment at any time without penalty.
I don't really want to go down the private sale avenue as that can be just full of hassle. I just hoped the dealer would class the trade-in as a deposit as they will recoup the money from selling the Laguna.
I should have kept my 12 year old Skoda when I left Uni and would have now got a good scrappage deal!!!
If the Laguna didn't keep giving me a bill each month on repairs then it would be cheaper to run than getting a new car. But with thing after thing cropping up and the cambelt due for a change I started exploring trading the car in.
I'm still unsure what to do!
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Four choices:
1/ stick with the Renault
2/ sell the car privately. As a personal loan you can do this whilst continuing to make the payments, which you pay off with the proceeds of the sale (plus a couple of hundred quid, depending on how much you get). Try Autotrader or as has been mentioned on these pages, webuyanycar.com or sure-sell.info
3/ PX the Renault for £2700, the dealer pays off the outstanding finance of £3200 so you will need to give him £500 plus any deposit he requires for the car
4/ Borrow the money you need to buy the new car from a bank, plus £500 to cover the negetive equity
Edited by bonzodog on 09/06/2009 at 12:27
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I just hoped the dealer would class the trade-in as a deposit as they will recoup the money from selling the Laguna.
Except they wont. Unless you pay off the finance before dealing with them.
You need to be clear on what is happening and the type of finance - is it secured on the guna?
The dealer isnt going to take a car as a deposit if they are also taking on the debt which is greater than the value of the car. In effect you seem to be asking if the dealer will take a debt of £500 as deposit. More an anti-deposit.
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The dealer isnt going to take a car as a deposit if they are also taking on the debt which is greater than the value of the car. In effect you seem to be asking if the dealer will take a debt of £500 as deposit. More an anti-deposit.
No I was just asking if they count the £2700 trade-in valuation as a deposit. Which from what others have said they seem to. I don't mind paying the £500 extra as that is fairly similar to what it is going to cost me to change the cambelt!
Just hope the Laguna sails through its MOT tomorrow *fingers crossed*
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Which from what others have said they seem to
Why would they? The car valuation does not cover the loan therefore there is no money left over to consider a deposit.
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So you want to roll over the outstanding finance into a new agreement?
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It's like the MPs who are claiming expenses for everything
Fair enough. I tend to think you should take what you can get.
I can't tell you how annoying it is that none of the other 3 people in my house who all work in public service will bother to submit £20-£30 mileage claims as "it's more hassle than it's worth" when MPs are claiming for bath plugs.
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If you hand it back to the Finance company owing more than it is worth,this will cause you an awful lot of problems with all sorts of credit,not just car loans.
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If you hand it back to the Finance company owing more than it is worth this will cause you an awful lot of problems with all sorts of credit not just car loans.
That's often stated but it's apparently not true because VT is an entirely legal process. It should even be written in to the original agreement.
The car finance "industry" tried to get VT removed a while ago, but the Government refused.
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Yes-it's legal but refusing you a loan because of your record is also legal.
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Yes-it's legal but refusing you a loan because of your record is also legal.
>>>>>>>> quite right too
no offence to the OP but who wants to loan money to people who default when it suits them
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Exactly - I won't be taking up this option. They lent me the money and they will get it back. I have the money sat in the bank so could pay it off....but then I lose more because the dealer would then just take the trade-in value of my car off the new car and not give me cash in hand.
I'm back to Citroen, probably, tomorrow afternoon if the car passes the MOT and will try and talk to someone who knows what they are on about. In fact I'm going to go to a different Citroen garage, the guys in Croydon seemed on another planet!
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If you would really like to sell it I can recommend sure-sell. Peasy easy and quick. Might get a better price than trading in and fairly sure of not getting less. Even if you have to hire/borrow some wheels to tide you over until you find a replacement.
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but then I lose more because the dealer would then just take the trade-in value of my car off the new car and not give me cash in hand.
But if there is outstanding finance, there is no money from the traded in car to take off the price of a new car. There is no deposit. If you have the cash then pay off the loan, trade the car in (you'd be better selling privately) for £2700 and thus get the £2700 off the new car.
If I understand you, you think the dealer should take the car and then both pay off £2700 off the loan for you and give you £2700 off a new car? That's uses the value of the car twice.
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It might be moot anyway if your finance is an unsecured personal loan.
But be clear - the 1/2s and 1/3s rules under the HP Act were put there to protect consumers - there's nothing immoral about terminating, and it is NOT a default, provided you comply with the agreement i.e. you make all the payments that have come due, plus any amount to bring the amount paid up to 1/2 of the HP price, plus the cost of repairing any damage (need to be on your guard on that bit).
If lenders want to put themselves at risk by lending too much over too long a period, they have to consider the hirer's termination rights.
However if it's a personal loan then tough nuts, you either pay or default.
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no offence to the OP but who wants to loan money to people who default when it suits them
That, and lending to the ones who could never pay, isn't that how we got into the current mess?
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Cockle, if the "current mess" were due to voluntary terminations then it would be very much the lenders' fault - lending too much over too long a period.
When I started selling financial products 30 years ago, the minimum HP deposit on a used car was 33% and the maximum loan period 24 months. This was deregulated shortly thereafter, and as with other areas of deregulation, the lenders have made their own beds...
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>>the lenders have made their own beds...
...and that's exactly why VT exists.
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no offence to the OP but who wants to loan money to people who default when it suits them
I'm sure you know a lot more about this area than I do, but it's not a default - it's an intrinsic part of the agreement and it's there (and, as I mentioned earlier, the Government has recently insisted that it remains there) for a very good reason. If you exercise the right to VT then you've acted entirely within the agreement.
There's some disagreement on consumer finance forums about whether it even appears on credit records - apparently some lenders do show it as a default and it takes a bit of pushing for them to correct it, so that would be something to watch for.
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