Laugh at my financial decisions, then help!

If you can pay off the current loan early, take out another loan over four years (or less if possible) at a much lower interest rate to pay off the current one. If you can overpay the new loan then do so.

Keep the Focus as you’ll lose too much trading it in
 
b0rn2sk8 said:
What’s HP if it isn’t ‘loan’? Ah yes, a very expensive loan.
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When people use the term loan they are referring to an unsecured personal loan, not a hire purchase agreement. You can see from the original post that he originally had a hire purchase agreement in 2017 and mentioned it in his post so it's not like he's confused about the difference.
 
squerble said:
March of this year, I "got the ick" about having a lease, and in a moment of madness, got a loan for £25k ( @ 10%, please don't laugh too hard), terminated the Kona lease early and bought a 2022 Ford Focus Estate. This is now a steaming £525/month, or a total payable of over £31k. No, I don't know what possessed me to go ahead with the loan at this rate.
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Hopefully if the 1.0 it has the timing chain rather than wet belt in oil. If the latter it needs the right oil and regular oil changes, definitely not the ford 18k / 2yr. - Ecoboom.
 
My advice - sell the car immediately to Motorway for £16.5k. This is a really good offer considering you can buy hundreds of 2022 1.0 Focus' estates from a Ford main dealer for around £16-17k. I just did a quick bit of reading and can see that on a personal loan you can pay off £8k per year without fees? If that's correct and how I've understood it, pay off £8k as soon as you sell the car, and stick the remaining £8.5k in a 5% savings account until March 2024 when you will entered a new year on your loan, and pay off another £8k. Yes it will mean that you have some £6k to pay off on an asset you don't even have, but unfortunately, that's the cost of A) taking out a personal loan at such a high rate and B) buying a 1 year old Ford Focus which are well known to drop like a stone in value C) buying a newish Ford, in the most expensive way (main dealer), at a time when the car market was the most overvalued in the last 20+ years(?). You were already in negative equity the moment you shook hands on that car, which has been further compounded by the car market crashing, especially in the segment you bought from.

However, I'd rather have a relatively small £6k loan hanging over me (which although is still at 10%, will drastically reduce the amount of money you're paying on interest), rather than an estate Ford that's crashing in value, and a £22k 10% loan hanging over me.

You could even look to pay off the remaining £6k, assuming you have some savings, and see what the early repayment charge is. If it's not too bad, this would be your quickest way out of this.

As a side note - I'm sure you may have an inkling, but you are utterly terrible at buying cars or managing finances. In the future, you should only buy a car following written approval from a committee of responsible adults. You should never take a loan out again unless approved by a responsible adult. And you should start looking at some nice £5k cars to tide you over for the next couple of years as you recover from the financial bumming you have given yourself over the last 2 years.
 
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[TW]Fox said:
When people use the term loan they are referring to an unsecured personal loan, not a hire purchase agreement. You can see from the original post that he originally had a hire purchase agreement in 2017 and mentioned it in his post so it's not like he's confused about the difference.
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Absolutely correct - current situation is an unsecured personal loan. Representative rate at the time was around 6.9% but when I did the full application they only offered 9.9%.


decto said:
Hopefully if the 1.0 it has the timing chain rather than wet belt in oil. If the latter it needs the right oil and regular oil changes, definitely not the ford 18k / 2yr. - Ecoboom.
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It's the 1.0 MHEV which is indeed the newer timing chain model, so much less chance of EcoBoom.


Gaygle said:
My advice - sell the car immediately to Motorway for £16.5k. This is a really good offer considering you can buy hundreds of 2022 1.0 Focus' estates from a Ford main dealer for around £16-17k. I just did a quick bit of reading and can see that on a personal loan you can pay off £8k per year without fees? If that's correct and how I've understood it, pay off £8k as soon as you sell the car, and stick the remaining £8.5k in a 5% savings account until March 2024 when you will entered a new year on your loan, and pay off another £8k. Yes it will mean that you have some £6k to pay off on an asset you don't even have, but unfortunately, that's the cost of A) taking out a personal loan at such a high rate and B) buying a 1 year old Ford Focus which are well known to drop like a stone in value C) buying a newish Ford, in the most expensive way (main dealer), at a time when the car market was the most overvalued in the last 20+ years(?). You were already in negative equity the moment you shook hands on that car, which has been further compounded by the car market crashing, especially in the segment you bought from.

However, I'd rather have a relatively small £6k loan hanging over me (which although is still at 10%, will drastically reduce the amount of money you're paying on interest), rather than an estate Ford that's crashing in value, and a £22k 10% loan hanging over me.

You could even look to pay off the remaining £6k, assuming you have some savings, and see what the early repayment charge is. If it's not too bad, this would be your quickest way out of this.

As a side note - I'm sure you may have an inkling, but you are utterly terrible at buying cars or managing finances. In the future, you should only buy a car following written approval from a committee of responsible adults. You should never take a loan out again unless approved by a responsible adult. And you should start looking at some nice £5k cars to tide you over for the next couple of years as you recover from the financial bumming you have given yourself over the last 2 years.
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Thanks for the full layout of steps here. I'm not sure what you read but the amount one can pay off early and/or fees is surely down to the individual loan? As far as I can see, the terms of my loan allow payment of any size, be that a part or full repayment of the capital, at any time, without fee and so I could probably skip a few steps. Some quick maths yesterday shows about £22k capital still to pay, so even if I did get the £16.5k from Motorway I'd still have about £6k shortfall like you said.

As for you side note - yes, fully deserved. The only issue with the "nice £5k" part is that seems to be the going price for an old £1.5k banger - there's another thread with recent posts in Motors talking about this current state.
 
  • Sell car and pay lump sum off loan.
  • Go without a car for 6 months or so and prioritise paying off rest of loan.
  • Save for another 6 months and buy a banger outright.
  • Stop obtaining cars via finance.
Hesitate to ask but...do you have other debts?
 
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EvilRob said:
  • Sell car and pay lump sum off loan.
  • Go without a car for 6 months or so and prioritise paying off rest of loan.
  • Save for another 6 months and buy a banger outright.
  • Stop obtaining cars via finance.
Hesitate to ask but...do you have other debts?
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Thanks. Other than a joint mortgage (fixed at 2% until 2027), no debts. Credit card used monthly for various bits but paid in full; 3-month emergency fund is there etc., I've just lost my head in the last couple of years on these car purchases/leases. If context is helpful, my take-home is around £3,300/month although that'll drop slightly as I start to pay some additional pension contributions to avoid/get tax relief from the 40% rate.
 
squerble said:
Thanks. Other than a joint mortgage (fixed at 2% until 2027), no debts. Credit card used monthly for various bits but paid in full; 3-month emergency fund is there etc., I've just lost my head in the last couple of years on these car purchases/leases. If context is helpful, my take-home is around £3,300/month although that'll drop slightly as I start to pay some additional pension contributions to avoid/get tax relief from the 40% rate.
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Great; you could probably fix this reasonably quickly if you're willing to deal with some hassle short term.

It's super tempting to spend too much on cars, especially once you're used to driving something nice but come out of HP or PCP with nothing to show for it.
 
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EvilRob said:
Great; you could probably fix this reasonably quickly if you're willing to deal with some hassle short term.
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It's definitely one to think about. The lack of a car for nearly a year would be hard to swallow, especially when my partner's car is an aged 2007 Micra. It's still going OK, but I don't know how I'd feel about that being the only car in the household. I fully accept this all my own doing, but the old Micra is a big part of the reluctance in having no car, as well as losing a freedom I've had since 2007.
 
squerble said:
It's definitely one to think about. The lack of a car for nearly a year would be hard to swallow, especially when my partner's car is an aged 2007 Micra. It's still going OK, but I don't know how I'd feel about that being the only car in the household. I fully accept this all my own doing, but the old Micra is a big part of the reluctance in having no car, as well as losing a freedom I've had since 2007.
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Since you don't need a car for work, you could go with the Micra plan and re-evaluate if something happens to it. Not having a car for a while isn't ideal, but there aren't really zero consequence fixes once financial mistakes start adding up.

Good luck whatever you decide.
 
squerble said:
Thanks for the full layout of steps here. I'm not sure what you read but the amount one can pay off early and/or fees is surely down to the individual loan? As far as I can see, the terms of my loan allow payment of any size, be that a part or full repayment of the capital, at any time, without fee and so I could probably skip a few steps. Some quick maths yesterday shows about £22k capital still to pay, so even if I did get the £16.5k from Motorway I'd still have about £6k shortfall like you said.

As for you side note - yes, fully deserved. The only issue with the "nice £5k" part is that seems to be the going price for an old £1.5k banger - there's another thread with recent posts in Motors talking about this current state.
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No worries, sorry, should have point a smiley face after the "side note" - was just joking, wasn't trying to have a go :)

I read about the £8k thing here:


However, if your loan allows you to repay it all early - go for it!! Sell the car, and have only £6k left to worry about, which is a much more manageable and less scary figure. And you'll be rid of the Focus whose value appears to be in freefall.

There are *loads* of decent A-B cars for £5k. You really don't need to spend a fortune on a car if you buy right. Hell, there are loads of decent A-B cars for £2.5k. Yeh they won't be cool or fast - but they'll do until you clear your loan, can start fresh and get a nicer car by doing it right this time
 
Bug One said:
That would be about -£10k. :p
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I should have read the whole thread although I do struggle to get my head around other peoples finances while acknowledging the fact that if everyone had the same level of debt aversion that I have the economy would grind to a halt.

I didn't realise that £31k was the current outstanding debt. Basically your choices are simple with that level of negative equity;
  • Carry on with the current monthly payments and Ford Focus.
  • Do without a car and keep paying off the rest of the debt for an asset you no longer have.
  • Shift the car, clear a chunk of debt and finance another car at hopefully a better rate... but PLEASE don't do this!
Sounds like you don't need a car so I'd go with the middle option until you have cash on hand to buy something outright.
 
lordrobs said:
I should have read the whole thread although I do struggle to get my head around other peoples finances while acknowledging the fact that if everyone had the same level of debt aversion that I have the economy would grind to a halt.

I didn't realise that £31k was the current outstanding debt. Basically your choices are simple with that level of negative equity;
  • Carry on with the current monthly payments and Ford Focus.
  • Do without a car and keep paying off the rest of the debt for an asset you no longer have.
  • Shift the car, clear a chunk of debt and finance another car at hopefully a better rate... but PLEASE don't do this!
Sounds like you don't need a car so I'd go with the middle option until you have cash on hand to buy something outright.
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I think you've misread it - I think he meant that if he paid off the £25k loan as he originally intended to, he would have ended up paying £31k back overall when the interest was counted. I'm assuming it was a £25k loan over 5 years at 9.9% = £31486 total repayable or £525pm which is what he mentioned he was currently paying

He's currently got £22k left to pay on the loan and the car is worth about £16.5k on a good day
 
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