Does CU car loan count as finance against car?

D

dubdub123

Registered User
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567
Hi
I have a Credit Union loan for my car and Im looking to now possibly trade it in against another car.

Would this existing loan count as finance on the car and would I have to clear the loan before trade in?

Im hoping to keep the loan as-is and just pay any difference myself to seller, if that makes sense.

Thanks
 
dubdub123 said:
Hi
I have a Credit Union loan for my car and Im looking to now possibly trade it in against another car.

Would this existing loan count as finance on the car and would I have to clear the loan before trade in?

Im hoping to keep the loan as-is and just pay any difference myself to seller, if that makes sense.

Thanks
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You shouldn;t have any problem doing that with a term loan, which this loan agreement likely is.
 
Yes it was taken out as a 5 year loan. the bank draft was made out directly to the dealer.
Ive had quick look and agreement states purpose is a car loan but doesnt specify the car reg or anything.
 
dubdub123 said:
Im hoping to keep the loan as-is and just pay any difference myself to seller, if that makes sense.
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That should work ok. The loan is for a car... any car... you can do what you propose. All the CU cares about is getting repaid.

Just make sure you are comfortable paying the loan, paying the difference and that you don't over stretch yourself financially.
 
PaddyBloggit said:
That should work ok. The loan is for a car... any car... you can do what you propose. All the CU cares about is getting repaid.

Just make sure you are comfortable paying the loan, paying the difference and that you don't over stretch yourself financially.
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Yes, it will be a little while before I go down this route and I am planning to save the difference and pay off more of the loan first. I have a 2013 hyundai i30 and just want to go up a few years (not necessarily same make/model) so depending on trade in value, put in just a few thousand.

The last 2 cars that I had, I held onto til they were basically scrapped and had to scramble to purchase my current car, as they just weren't worth fixing.
Hoping to try upgrade every couple of years to avoid that same situation.
Ideally if i can continue with existing loan and just save the difference that would work.
 
dubdub123 said:
it will be a little while before I go down this route a
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Credit Union loans are very expensive.

You are probably right to give yourself flexibility by building up the cash needed to trade up.

But against that, you are probably paying 6% to the the Credit Union for the privilege of borrowing from them.

In reality, you could be paying a lot more, if they are one of the CUs that require you to deposit 25% of the loan in "shares".

I suggest you give the figures to get the best suggestions:

1) Current balance on loan
2) Interest rate
3) Value of shares in Credit Union
4) Cash savings at present and where they are
4A) Any other realisable investments
5) Value of car at present
6) Likely cost of new car
7) Roughly what date you expect to trade up

Without all this information it's difficult to advise. But I suspect that if you are not trading up for a year or two, your best strategy would be to pay down the credit union loan as quickly as possible to save interest. And then take out a new loan when you need to trade up.

In fact, when you go to trade up, it's possible that there might be better financing arrangements such as 0% finance from the car company which would allow you clear your loan completely.

Brendan
 
Thank you Brendan, thats a good point about 0% loan. My current rate is variable 5.45%.

Ive never traded in, or sold a car before as they've usually just become worthless and a money pit, and this car is the most expensive one Ive bought (over 9k) and really want to avoid that happening again.

Im actually planning to update the money makeover that I posted some time ago, as I took on board a lot of that guidance.

Im going to start researching cars and get an idea of trade in value for my own. It may be preferable to privately sell, but im nervous about going that route. I just want to actually plan ahead for this.
 
From your Money Makeover thread

Car loan: 8400 at 5.1% over 5 years 160pm
Other loan: 25,000 at 5.7% over 10 years , 273pm
Savings: 2k
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You have very high and very expensive loans. Your priority should be to reduce these as quickly as possible.

I understand the point about trading up your car, but I am not sure you can afford to do so.

Someone else might be able to advise on the optimum way to buy a car.

Brendan
 
Brendan Burgess said:
From your Money Makeover thread



You have very high and very expensive loans. Your priority should be to reduce these as quickly as possible.

I understand the point about trading up your car, but I am not sure you can afford to do so.

Someone else might be able to advise on the optimum way to buy a car.

Brendan
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Yes the 10 year loan is a real concern.
Ive recently moved jobs and along with some tax refunds, my savings have increased.
 
It might make sense to keep this car for another year or so when i have a better handle on the 10 year loan.
 
I would think that unless you have a HP finance deal or PCP loan, then a personal loan would not be assigned to a car
 
jpd said:
I would think that unless you have a HP finance deal or PCP loan, then a personal loan would not be assigned to a car
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Its a loan from the credit union and thetes a reduced rate for car loan vs personal loan.
The loan contract doesnt state the reg or anything, but the draft was made out to the garage.
 
dubdub123 said:
Its a loan from the credit union and thetes a reduced rate for car loan vs personal loan.
The loan contract doesnt state the reg or anything, but the draft was made out to the garage.
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The loan is not secured against the car . Only HP lease or PCP is secured . You have a personal loan . Whether it’s for a car or to buy a hair transplant the credit union don’t care once you repay them
 
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