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[Gibbo]

Ha no not a chance, even if I was a multi millionaire I would never buy a car new.




I got some details about whats going on, the guy is so deep in the hole right now he cant afford to clear his finance for the bank to release the car

Agreed on never buying new, unless its a limited edition or limited numbers or you know future values will be strong or its a car you never plan on selling. Otherwise buying new means you experience a lot of depreciation and you have to refrain from spanking it as you have to run it in.

Bought new twice, the Mustang, which lost me very little and I await delivery of a Yaris GR which will probably never get sold or not for a long time, unless they release a hotter version then yes it will be sold / traded against that but suspect with demand rocketing for them that future values will no doubt be stronger than your usual mass production hot hatch.

Shame the deal fell through and unfortunate the current owner is having issues financially. But normally its for a reason and before you know it a better car will come along and you will be happy to wait, plus its not really a big deal right now as buying a supercar in Winter does not give you too many opportunities, well so says me he collected the 458 in February, but in fairness that day was totally freak weather as it was 20c in February and the result was an awesome collection day and day out for us both.

 

[wesley]

I got some details about whats going on, the guy is so deep in the hole right now he cant afford to clear his finance for the bank to release the car

The finance is more than the car worth?

 

[kindai]

The finance is more than the car worth?

Yup.

 

[daz]

I can imagine it's not going to be unusual in the next few months to a year - lots of people will have bought cars like this on finance with 15-20% deposits and will now be in negative equity.

 

[wesley]

Yup.

That's shame.

 

[kindai]

I can imagine it's not going to be unusual in the next few months to a year - lots of people will have bought cars like this on finance with 15-20% deposits and will now be in negative equity.

Yea, its not unusual when buying supercars, but the amount this guy is in the hole is steep.

 

[Vita]

@kindai can you explain it further as I don’t really understand stuff like this.

My take is car was being bought £xxx less than what he owes to the finance company?

So in order to sell to you he needed to pay out from his own pocket to the finance company, but he hasn’t got the hard cash to do so?

Or am I totally wrong?

 

[randomshenans]

You're right @Vita

 

[Semple]

@kindai can you explain it further as I don’t really understand stuff like this.

My take is car was being bought £xxx less than what he owes to the finance company?

So in order to sell to you he needed to pay out from his own pocket to the finance company, but he hasn’t got the hard cash to do so?

Or am I totally wrong?

That'd have been my guess as well.

Although it begs the question as to whether its value would recover? It's not like a house where if you were in negative equity you would make the decision not to sell/move if you didn't need to, but a car could continue to drop in value. So do you take a gamble and sell it for X loss, or keep it and have to sell it for 2X loss in a few years.

 

[Basher]

That'd have been my guess as well.

Although it begs the question as to whether its value would recover? It's not like a house where if you were in negative equity you would make the decision not to sell/move if you didn't need to, but a car could continue to drop in value. So do you take a gamble and sell it for X loss, or keep it and have to sell it for 2X loss in a few years.

It depends what kind of finance scheme it’s on. I’ve been in negative equity once on a car and just Voluntary Terminated it and the negative equity goes away.

 

[daz]

Let's say you bought for £250k with £25k down, on HP with a balloon of £160k. You'd be paying £2.5k-£3k/month on a deal like that (keeping the balloon high to get the monthlies lower).
The car might now only be worth £140k. At the end of the term you need to to pay the balloon (£160k) so that means sell the car *and* find 20k. Normally the idea is to be realistic/conservative with the balloon, to avoid being in the negative equity situation like this, but I can imagine some companies have been pushing the boat as far as they can go by setting the balloon higher and the keeping the monthly payments lower... kicking the can down the road so to speak.

 

[Django x2]

The finance is more than the car worth?

Pretty much every car ever, including the little Focus you see on the drive next to you. Chances are the outstanding finance is worth more than the car as people want to see £199 a month over 4 years instead of £339 over 2 years.

 

[Basher]

Let's say you bought for £250k with £25k down, on HP with a balloon of £160k. You'd be paying £2.5k-£3k/month on a deal like that (keeping the balloon high to get the monthlies lower).
The car might now only be worth £140k. At the end of the term you need to to pay the balloon (£160k) so that means sell the car *and* find 20k. Normally the idea is to be realistic/conservative with the balloon, to avoid being in the negative equity situation like this, but I can imagine some companies have been pushing the boat as far as they can go by setting the balloon higher and the keeping the monthly payments lower... kicking the can down the road so to speak.

Or you just hand the car back, without paying the balloon ...

 

[daz]

Or you just hand the car back, without paying the balloon ...

Not every finance agreement allows you to do this. Otherwise this chap wouldn't be in this situation where he has an Aventador that he can't even afford to sell.

 

[Basher]

Not every finance agreement allows you to do this. Otherwise this chap wouldn't be in this situation where he has an Aventador that he can't even afford to sell.

Indeed, but also maybe aren't aware of the options in the agreements which they have. Like I said, depends on the finance agreement.

Also, VT is only available once 50% of the payments have been made, so maybe Aventador guy isn't up to that point, yet.

 

[panthro]

Not every finance agreement allows you to do this. Otherwise this chap wouldn't be in this situation where he has an Aventador that he can't even afford to sell.

Beggars belief that you'd take a PCP agreement that didn't give you the option to hand the car back. Although I'm not an expert on high value purchases.

 

[daz]

It won't be a PCP, it'll be Hire Purchase with Balloon or Conditional Sale with Balloon.

Balloon Hire Purchase is essentially the same as standard Hire Purchase, but with a relative proportion of the amount of credit deferred until the end of the agreement. Unlike PCP, there's no Guaranteed Minimum Future Value (GMFV) and you do not have the option to return the vehicle at the end of the agreement.

When the agreement starts

• Agree an initial deposit and how long you want the agreement to run for
  
  
• We will calculate your final payment and confirm your regular monthly payment
  

When the agreement ends

• Pay the deferred Final Payment for the title of the vehicle to be transferred into your name
  
  
• Part exchange the vehicle subject to settlement of your existing finance agreement (if the part exchange does not cover the Final Payment including interest (where applicable) you would need to pay the shortfall to settle the finance agreement)

From https://www.lookers.co.uk/land-rover/finance/balloon-hp but lots of places offer this type of finance. Because of the word "balloon" it can seem to some people like a PCP...

 

[Mercenary Keyboard Warrior]

VT on PCP Includes the balloon

On cars with low depreciation is quite normal that you never reach the VT point since the payments plus interest etc never manage to overcome the balloon

https://www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/

"The Total Amount Payable is the total amount borrowed plus interest and fees. It also includes the Guaranteed Future Value (GFV) on a PCP. This means that you usually don’t reach the voluntary termination point until very late in a PCP agreement. It is not simply the halfway point of your agreement, as that is unlikely to be anywhere near the 50% repayment point on a PCP."

 

[Mercenary Keyboard Warrior]

It won't be a PCP, it'll be Hire Purchase with Balloon or Conditional Sale with Balloon.


From https://www.lookers.co.uk/land-rover/finance/balloon-hp but lots of places offer this type of finance. Because of the word "balloon" it can seem to some people like a PCP...

That balloon HP is for business customers

 

[panthro]

It won't be a PCP, it'll be Hire Purchase with Balloon or Conditional Sale with Balloon.


From https://www.lookers.co.uk/land-rover/finance/balloon-hp but lots of places offer this type of finance. Because of the word "balloon" it can seem to some people like a PCP...

Thanks, didn't know such an agreement existed for cars. Certainly risky unless you have the credentials and capital to back it up if the balloon is higher than the value.