Soldato
Some may say hindsight but to me the obvious thing to do would be to sell the car if it has a bit of money worth in it and just buy a £300 banger for the time being.
Friend in debt with logbook loan
- Thread starter BoyceyLDN
- Start date
**Update**
They have written to the loan company and contacted CAB over weekend, so hopefully here more this week.
For the people asking why he did not sell his car - He lost his job and felt he would need a Car to commute to work in next job / In a relationship with with someone 15 miles away and currently rents so could not take out and equaity, in hindsight of course they wish they didn't do it, feels embarresed to talk about it hence why i have only found out now and only done it due to being desperate from losing job and bills etc. Maybe in hindsight should have sold car or something but it's always easy to speculate from the outside looking in. Myself and many others have not been in the situation of being out of work and desperate for money and i sure a lot of people have the luxury of asking the bank of mum and dad if they do etc.
I personally think they will have to settle at 4k which means either they take the car or raise the cash, i told him if that happens then tell them to take the car and buy an old fiesta / clio for around the £800 mark, they are obviously keen to resolve this and get rid of this debt which is the plus part, i could imagine many people bury their head in sand in these situations.
They have written to the loan company and contacted CAB over weekend, so hopefully here more this week.
For the people asking why he did not sell his car - He lost his job and felt he would need a Car to commute to work in next job / In a relationship with with someone 15 miles away and currently rents so could not take out and equaity, in hindsight of course they wish they didn't do it, feels embarresed to talk about it hence why i have only found out now and only done it due to being desperate from losing job and bills etc. Maybe in hindsight should have sold car or something but it's always easy to speculate from the outside looking in. Myself and many others have not been in the situation of being out of work and desperate for money and i sure a lot of people have the luxury of asking the bank of mum and dad if they do etc.
I personally think they will have to settle at 4k which means either they take the car or raise the cash, i told him if that happens then tell them to take the car and buy an old fiesta / clio for around the £800 mark, they are obviously keen to resolve this and get rid of this debt which is the plus part, i could imagine many people bury their head in sand in these situations.
Handing the lender the keys doesn't sound like the best idea. They'll just send the car to auction and come after the lendee for any shortfall. He'd receive a better price selling the car privately, albeit for more effort.
But he's legally not allowed to sell the car
Be careful here. They (probably, as it's how these usually work) already own the car. That £4,000 they're quoting may already be accounting for them keeping the car, rather than being in lieu of the car as you seem to be assuming.
Soldato
Well we can assume it does.
He owes 12k.
The car is worth 4k.
He has repaid 3.5k
They say they will settle the account for 4k.
In the OP it makes it sound as though the company is willing to write off 4k but why would they do that? No, they already own the car. The 4k they will accept is the difference between the state of account and value of the car.
Soldato
Because getting 4K back now rather than potentially not getting it back is a win for the creditor.
It's quite common for settlements to be accepted when heavy debts are involved.
Soldato
Right but they already own the car. Their company name is on the logbook. He confirmed that when he said they did the HPI check.
So I suppose the big question is do you get the car back when you settle the 4k?
Stereotype much?
Soldato
That's a pretty good questions and honestly one I wouldn't know the answer to.
I'd assume so? But I'm not sure, it would depend on the terms I'd expect.
Part of me wants to say yes if it's a secured loan.
However, if they've ownership of the vehicle, I wouldn't be so sure.
Soldato
If not... Ouch
Soldato
Ouch indeed, but it's still an 8k settlement for a 12k owing. Which isn't too farfetched from what you should expect on a settlement.
Soldato
But 3 or 4 grand has already been repaid. It sounds extortionate even if legal.
People with no income are at a very high risk of default so a high rate of interest has to be charged for them to make a profit on average.
It maybe more
He paid about £3500 and there asking for 4k to settle
But they also have his car in there name
What the value of the car ???
Soldato
He said 4k. But we don't know if they keep the car after the 4k settlement
That's not how loans work.
You don't get charged interest for the future if you settle now.
Otherwise if you went to settle a £100k mortgage, they'd ask for £200k.