Quite disappointed that I have to ask this, but there is a reasonable chance that I'm about to be made redundant and unfortunately I still have a fair wallop of outstanding credit on the Fiesta.
I'm not sure what I will do about it, but the worst case scenario, which hopefully I won't have to do, is that I would have to try and sell it.
Supposing I choose to sell it, how would I go about it? I would be replacing it with a car costing £2K or less so a trade in at a dealer is unlikely as there aren't many dealers round here that deal in old and new metal from the same forecourt.
So that leaves a private sale, what are the pitfalls of trying to sell my car with finance outstanding? Would the buyer have to settle the finance with Ford and pay the difference to me? Obviously the credit would show on an HPi check.
Any general advice about how I would go about this would be appreciated.
In case anyone doesn't know the car is an 03 plate 1.4 Fiesta Zetec A/C.
Any general advice appreciated!
Blue
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By the way, I should say that wasn't an advert for my car, it is certainly *not* for sale at the moment, I just want to know how a sale would happen so that I'm prepared in case the worst happens.
Blue
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Hopefully you aren't in a negative equity situation.
If selling privately, ensure you are up front with your prospective buyer. Telling them the car has finance outstanding before they find out through an HPI check will probably stop them from running a mile.
If they decide to purchase, get them to write out two cheques. One to the finance company for the settlement figure (make sure you get this in writing from the finance company - and remember they only last for 21 days or so), and then another one to you for the balance. Once the finance company has given confirmation that the loan has been settled, and your cheque has cleared, hand over the car.
I'm not sure though as a buyer I'd be keen to go through that. It may make it harder for you to get a decent price.
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I would talk to the dealer you bought it from. They may offer to settle the outstanding finance and offer you a different deal on a much cheaper car. As the car is only 6 months old I would guess you could be in negative equity depending on how much you put down as a deposit. Check your finance agreement and check whether there is payment protection. If so then your payments would be covered for a certain time thus giving you the opportunity to find another job. If this car is reliable it may be financially more prudent to hang on to it rather than taking pot luck with a 2k car which could just give you bills instead of monthly payments. I would also ask Ford whether you could have some sort of payment holiday and extend the agreement by 3 months or whatever.
I have no idea what line of work you are in but if you want work then being a plumber, plasterer, joiner, builder, decorator or electrician brings in plenty just about anywhere in the country!
teabelly
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It depends on the precise type of credit you have used to acquire your car. If it is any form of agreement in which the Finance House retains title until you have made ALL the payments (Hire Purchase, Lease or similar) you MUST settle the finance either before or at the same time you sell the car. Failure to do so means that you are not only breaking your agreement, but are also selling something which is not yours to sell, (as it belongs to someone else). This can be construed as "obtaining a pecuniary advantage by deception", an offence in law.
On the other hand if you have an unsecured personal loan the car is yours to dispose of as you wish. There may be a clause in your loan agreement requiring you to settle the loan if you dispose of the car, but as long as you carry on making the payments, there is no benefit to the lender in attempting to enforce the clause, (in the unlikely event that they ever found out about the sale), so I would not worry too much about that!
Many credit companies do register Credit Sales/Loans against the car with HPI, but this would probably be only nuisance value if you sold the car privately.
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"Rude, crude and socially unacceptable"
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The car's not in negative equity as I put in an 02 Fiesta in part ex to pay for it, the outstanding finance is just under £4K as far as I know.
That's my question just about answered anyway, I had a good idea that this might have been how things worked, but I wanted it confirming just in case :-)
Blue
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No advice, just good luck with the job, Blue. Why do these things always happen just before Christmas?
Nick
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Tell me about it! :-)
Thanks
Blue
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Blue, sorry to hear the bad news: let's hope it doesn't happen. have you looked at the Alliance and Leicester deal? (car purchase plan) if you need to finance 4k you can do so for 85 pounds per month over 4 years with a 1200 pound "final payment". It might be a way of reducing your payments to a more manageable amount if the worst happens, and could enable you to keep the car until you get another job. Only problem might be that I seem to remember you got the free insurance deal...?
Tim{P}
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On the other hand I'm sure yer old man won't see you beat on this one ;)
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I'm sure he won't :-)
Yeah, I got the free insurance deal, which I have a horrible feeling is not transferrable. :-(
Blue
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Yeah, sell the car and your insurance will terminate with it. I think it would be transferrable if the car were written off or stolen though. That means that your current payments would go straight from car finance to car insurance, with the added expense of maintaining an older, maybe thirstier, car.
As for some of the suggested options - if you are at all concerned about your credit rating, try not to negotiate a payment holiday as this will be held on your file and count against you in the future. Of course, if the alternative for you is a default, it will hurt less.
The Car Purchase Plan idea is a good one, as there isn't really a sting in the tail with the balloon payment - you can just keep on paying at the same payment until the balloon is paid off. The problem is that, if you are imminently expecting to lose your job, or worse, have lost it, there is little chance of you getting approval on one.
I'm not suggesting that your parents either should or would provide a guarantee/loan to pay off the finance in your name, but five years down the line when you may be looking for a mortgage, a replacement car or whatever, if they did see you through somehow, this would provide a major boost to your financial situation.
Also, depending on what it is you do, you may not find that you are out of work for long in any case and this should be a non issue, even if the worst does happen.
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David - "I think it would be transferrable if the car were written off or stolen though." - I hope this is an observation rather than a suggestion!! :-)
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Thanks for the replies people, most appreciated!
I work in the call centre industry so there is still fortunately plenty of other positions to fill, so I should be ok, fingers crossed, touch wood etc. etc! :-)
Blue
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