Help required please,

I have 4 year car loan which I have been paying for 3 years and 9 months.

This loan is made up two parts: a "balloon"and a loan. So for example, the car loan is for £20,000 made up of a £10k balloon and £10k loan.

I pay a monthly payment which covers the £10,000 loan and after 4 years, I would have paid the £10k loan off, and a small amount is paid to cove the interest on the balloon.

In three months time I will have paid the £10k loan, however the balloon will need to be paid or re-financed.

My problem is that since taking on certain creditors with the help of some special Caggers, a default has been entered on my credit file and there will be no chance in restructuring the £10K balloon. With the depreciation of cars across the board, I will no doubt find myself in negative equity to the tune of £4-5K

My question is: can I ask my original lender (RBS) to refinance my balloon so I can keep my car without doing a credit check? What happens if I can not refinance the balloon? Can they come and take my car away as the credit agreement term has been completed? What would you advise so I can keep my car? Thank you in advance

Jameson

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i have asked to see if anyone can answer

Thanks

from my limited knowledge when the term ends you either pay the baloon, Pay the lump sum and keep the car, hand car back and owe nothingor part exchange car for a new model and new deal with the dealer paying the baloon and the remainder of the vaue is put towards the new car. I think that is the only options. The finance company own the car.

Why would you want to pay an extra 10 k for a car that is only worth 5k anyway?

Hi Jameson78

i am in exactly the same position as you with RBS, and am currently challenging the origional agreement.

i will look at any replies with interest

dave

from my limited knowledge when the term ends you either pay the baloon, Pay the lump sum and keep the car, hand car back and owe nothingor part exchange car for a new model and new deal with the dealer paying the baloon and the remainder of the vaue is put towards the new car. I think that is the only options. The finance company own the car.

Why would you want to pay an extra 10 k for a car that is only worth 5k anyway?

That is a Personal Contract Purchase (PCP). With PCP you don't have to commit to buying the car at the outset. You use it for an agreed period of time (24-48 months) and then decide at the end of this period what you would like to do. Often if you go over the agreed miles, you pay a small fee, say 3p a mile.

My agreement is called a Hire purchase with a balloon. With this you gain the benefits of fixed rate finance, but with the added advantage of a lower fixed monthly outlay because you defer repayment of some of the borrowing. At the end of the agreement your options include car purchase, refinance, part exchange or resale.

My balloon is will due for payment in about 3 months. I am trying to find a way of keeping the car and getting RBS to re-finance the balloon. If they ask for the car back, that is when I will loose big time. I'm trying to figure out if there is a way that I can keep my car and continue payments.

I am sure other Caggers are in the same boat (4148boome) when it comes to paying the balloon at the end of the term in a HP with balloon agreement. Any advice would be really appreciated.

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The problem is that i can not afford the monthly payment to the creditor as I have spent the money fixing up the car so i can get the best price on sale. I am now behind with my payment.

What would be the view of writing to them and explaining that i am selling the car and as soon as i have the sold, I will pay off the arrears and balloon. I am expecting to have a small amount of equity left.

Second question. What is the protocol in selling the car when I clearly have outstanding finance. Do I ask the buyer to pay the balloon off and pay me the difference? Do I make it clear that there is outstanding credit on the car. Might be silly questions, but first time selling. Thanks.

Legally you cannot sell the vehicle until the HP is paid off completely.

You can maybe buy a bit of time by playing dumb and claiming you thought last month was the last payment and you were just waiting to discuss with them the options of waht happens to the ballon figure now. That could get you a couple of weeks grace while they "clarify the position" to you.

In reality what normally happens in these type of situations if you can't pay the balloon figure off is they offer to refinance the remaining figure over teh next 1 or 2 giving you a new (usually lower) monthly figure to pay.

If you are confident you can get it sold quickly, you need to use a method that both you and the buyer feel is safe for your money. Perhaps you can use bankers drafts made out to the finance company which are pretty much unstopable I think once they are sent. Not an expert on this though, so wait for some more answers.