trading down finance from a 2006-2001 car

A

annemarief8

Registered User
Messages
49
hi all,

I ma just curious to know how this might work, as i find the field of motor finance a complete blur seeing as how every diff sales person seems to be able to do somthing different with the figures.
I hate feeling on the back foot when dealing with them because i din't understand the workings of the schemes.

basically my bro wants to trade his car down from a 06 car to a 01 model (for various reasons, lower monthly repayments being primary)

he has finance o/s of 21k on the car. its worth approx 16k (thats lower limit but prob realistic)

new car is 14,900. My reckoning was that if dealer allowed him the 16k on his car, then the 5k balance off his credit would be added to the new finance of 14,900 therefore meaning he was financing 19,900

dealer reckons there is no way the finance company will allow him to trade down so many years and suggested getting a personal loan to clear his finance and then starting new deal on the new car. but this would mean he's ahve personal loan and motor finance then??

am so confused. any suggestions?
 
Re: 2006-2001 car

I don't really see much benefit here if he is doing it to reduce monthly payments - going from 21k to 19.9k - will his repayments not just go down by approx 5% of the current amount?

Unless he expects to use half the petrol or something or save on insurance?

Would the running costs (servicing/repairs) of the older car not potentially be higher as things are more likely to break/go wrong/need replacing?
 
I do not think a Bank will issue a car loan on a car over five years old.
 
HP: If he has paid (or pays up to ) 50% of the hire purchase cost, he can hand the car back and walk away (subject to normal mileage, wear and tear). It will be the banks problem then.
If the amount to be paid to reach 50% is less than €5K it is worth considering.

Otherwise, he will have to get a personal loan for €19.9K as HP will not work in this instance (age of car and fresh-air finance). You cannot secure a €14.9K car against a €19.9k debt.

Also by borrowing €19.9K on a 5 year loan, he can significantly reduce the amount he pays he monthly. Obviously, he will pay more in interest in the long run.
 
They must have changed the rules, because they used not to issue loans on cars over five years old, unless you went the way of personal loan.

Not a bad thing that they have changed their criteria somewhat.

I still have a personal loan with them for a car due to expire in September 2009. I cant wait for the loan to finish and never again, I think their rates are quite high.
 
VOR said:
HP: If he has paid (or pays up to ) 50% of the hire purchase cost, he can hand the car back and walk away (subject to normal mileage, wear and tear). It will be the banks problem then.
Click to expand...

Not the case, please don't advise people to do this, I have seen many people get burned by this over the years.
The bank will take back the car and usually sell it at an auction for a much lower price than its worth. You are then responsible to pay the shortfall ie. the "legal liability". This will be the difference between what the bank sold the car for and the amount you originally signed the agreement for. And the bank can bring you to court to recoup their loss.

I would go with what the garage owner says, get a personal loan to pay off the hire purchase (you cannot do anything with the car until you pay off the HP) Then sell the car privately so as to get more money for it, pay off the personal loan and then start again with whats left over.
I'm not sure if what your brother is doing is the best idea and will work out figures wise but if it does, I would do the above.
 
http://www.itsyourmoney.ie/index.jsp?pID=146&nID=388

How do I get out of my hire purchase agreement?
If you no longer want to keep the car, or find that you cannot afford the repayments, you can end a hire purchase agreement at any time. However, there are certain conditions and costs involved.
  • You must give notice in writing and agree to return the goods.
  • You must, by law, pay half the hire purchase price, less the total of your payments to date. This is sometimes called the half rule.
  • You must also pay for repair costs if you have not taken reasonable care of the car.
There is a big difference between the half rule as defined by the terms and conditions of a HP agreement and what you speak about. That is a surrender of the vehicle and I will agree that it is never in the best interest of the hirer to surrender the vehicle. The bank will chase for the difference.

However, the half rule is completely different as shown above.
 
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