Car Finance

Maddison

Hello peoples of the Motors forum,

Im unsure as to if this is the right place to ask this.

A friend of mine purchased a brand new car last year on finance, she has just found out shes having twins:eek: and the car she bought is only a two seater. She wants to get a larger car. Can she sell her car & buy a new one and still continue to continue paying the finance?

Just thought someone her might have a clue.

Thanks!
Mad

Kimbot

She can sell the car but pay any money straight back to the finance company to cover the loan. Most people will not buy a car unless the finance is cleared. If she failed to makes payments its not her that will loose out its the new owner.

Maddison

So the bank she got the finance through wouldnt allow her to continue making payments rather than paying off the loan in full then?

speedfreak

Maddison wrote: »

So the bank she got the finance through wouldnt allow her to continue making payments rather than paying off the loan in full then?

she will have to settle the old loan first and take out new loan for the new car.

e.g. old loan settlement figure 10,000
car trade in value 12,000
new car cost 15,000

trade in value of 12000 is used to pay off old loan 10,000 and 2000 is paid towards new car thus new loan of 13,000 is required.

she may be able to keep repayments the same depending on interest rate and length of loan.

Drummerboy08

speedfreak wrote: »

she will have to settle the old loan first and take out new loan for the new car.

e.g. old loan settlement figure 10,000
car trade in value 12,000
new car cost 15,000

trade in value of 12000 is used to pay off old loan 10,000 and 2000 is paid towards new car thus new loan of 13,000 is required.

she may be able to keep repayments the same depending on interest rate and length of loan.

Thats the basics of it, but it usually turns out more like this -

Settlement Figure - 10k
Trade in Value - 7k
Loss - 3k

Alot of people will re-finance that loss of 3k on top of the cost of their new car. However, i dont think the banks allow this anymore.

To answer your question, she will have to settle the full cost of the loan before she buys a new car. A garage will not take the car as a trade in if it is on finance. As pointed out above, most people wont buy it either.

colm_mcm

how long ago did she buy the car?

speedfreak

Drummerboy08 wrote: »

Thats the basics of it, but it usually turns out more like this -

Settlement Figure - 10k
Trade in Value - 7k
Loss - 3k

Alot of people will re-finance that loss of 3k on top of the cost of their new car. However, i dont think the banks allow this anymore.

To answer your question, she will have to settle the full cost of the loan before she buys a new car. A garage will not take the car as a trade in if it is on finance. As pointed out above, most people wont buy it either.

yea i was giving an optimistic example! she is gonna get hit big time with a one yr old car and one yr old finance deal.

Big Nasty

And be lucky if she gets a new / increased loan unfortunately!:(

eamon234

Speedfreak is right she is going to get nailed on the trade in and finance settlement. The other option is to find someone to take over the finance on the current car (I presume since it's a 2 seater it's something reasonably desirable!). This is subject to them being approved by the finance company. She also faces the problem of possibly being refused finance for the new car a lot has happened in the past year and finance houses are not giving loans as easily as they were. Either way your friend is going to lose out.
If they decide to sell the car they have to clear the finance in full as the car is the property of the finance company until the loan is settled.

Maddison

Yeah I kinda thought this myself but she was quite adamant she could continue the finance payments. Ah well shell have to put the babies on the roof then! Thanks for your help.