What do i do?

Casdawer

Casdawer

Casdawer

Soldato
Joined
14 May 2009
Posts
4,300
Location
Hampshire
Ok, I asked this question a little while back as I was sorting out some of my other finances (which is all done now! \o/)

ANYWAY, one of the questions was regarding my car which I got on Finance from VW.

It's a 1.2l Polo, basic edition with no remote central locking just AC and is currently costing me £190pm - my mileage limit PA is 12,000 which I will go over (I bought this car when I had a job closer to home but had to change due to getting fired) and it's an extra 0.45p PER MILE. I will be going over by about 2/3k so this will cost me an extra £1,000 per year.

Now, as well as paying that £190, I am also paying £150 for a car that I no longer own and still have 3 years left on it (I've been stupid with my money thus why I asked OcUK for finical advise which helped very much).

So currently at the moment I am paying £340 for this car (technically).

Now, I have a plan so please feel free to tell me how stupid / great my idea is and give any pointers when / if needed.

My plan is simple, find out how much it would cost to pay off the Finance then find out how much the VW and hopefully the 2 will match up (give or take) then take a loan out for the remaining loan balance of the £150 loan (about 4k) as well as an extra £8k to pay for a new car.

This of course would be a 12k loan which over 60 months is £240 which is £100 cheaper and it also means that -

a) I own the car
b) I do not have to pay to go over my mileage
c) the car is WAY better
d) I don't have to worry about buying the car after the 3 years are up.

SO, question is my fellow OcUKers - is it a good idea?
 
I have no idea what the interest rate is for my VW Finance agreement so cannot comment on that.

With the £190 + £150 = £340 x 36 = £12,400 + the extra for the extra mileage and the last payment to own the car.

With the new 'plan' it's £12,000 + 10% (loan interest) = £13,200 over 60 months = £240pm.

The 'plan' is the cheaper way of doing it - I'm still paying the exact same amount of money but just over a longer period of time. And in that time, I can be saving money to pay off the debt sooner (say £100pm * 36 = £3600 which means that I could pay off the loan 1 year earlier, possibly earlier).
 
So, to sums things up - are you guys telling me to stick with it?

Also, I do not plan on buying the car after 3 years as I hate the car!
 
I did consider it, and at the time I quite liked the Polo and was fit for purpose, but now that I am travelling further due to a job change it is not.

Would it be a better idea to take out a smaller loan and get a car around the 4k mark instead of the 8k area?
 
Well I had Mazda6 prior to this car and would love to get that car again, and for 8k you can get the newest model but you can get the older one (the one I had) for about 3k.
 
Right, so today I've called my loan company and VW to ask for settlement quotes.

For the loan it's £3261 and for the VW it's £8,575.

I believe I could get £8,000 for the Polo as it's not even a year old, but it has done 10,000k miles.

So, in theory I could pay of the car purely by selling it thus not having to spend any more money towards it.

This would have course leave me the £3,261 for the car loan, but my plan with this would be to increase my loan by £4000 and get myself a Mazda3 hatchback (as I love Mazda's) and keep that car till I run it into the ground. I asked my loan company how much this would cost me per month and they said £145 for 60 months or £176 for 48 months.

I'm already paying £150 for the loan already so I would be paying the same amount but I would not be paying the extra £190 for the Volkswagen.

So, is it a good plan?
 
[TW]Fox;21393799 said:
No, its a crap plan. There are issues.

a) How do you plan to settle the finance outstanding on the Polo in order that you can sell it?

b) Why do you keep borrowing money to buy cars? You do not need a £4000 car. You do not have any money. Stop spending money you don't have.

Buy a decent £1000ish car and get some savings behind you.
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A) I've been told by Volkswagen that I can sell the car and then pay of the outstanding balance, as long as they get their money they don't care what I do with the car.

B) The reason for this is that where a 1k car will be lovely if my job was just down the road but it's 30 miles away and I have to travel for my job so a 1k banger wouldn't be the best choice for me. I travel a lot and a car that only cost 1k will more than likely be un-reaiable and old.
 
[TW]Fox;21394536 said:
Get this in writing.



It is true that cheaper used cars are more likely to have issues, but a £4k car isn't sufficient above a £1k car to guarantee you wont suffer the same problems.
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When I spoke to the lady at VW she said that what normally happens if the person sells the car to either a tradesman or a private owner is that they'll call up when they're selling the car and the person/company buying the car will pay x amount towards the finance over the phone and then the person selling it would then pay the other part of it (if necessary) so that there is no outstanding balance on the car so the person selling the car doesn't actually get any money.
 
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