Unable to pay car finance (UK)

By Daedroth
in The Neobahn

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Daedroth

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I have recently become unemployed and don't have enough savings to pay for the bills and car finance, nor do I qualify for job seekers allowance. I am 2 years in a 3 year loan but the car has front end damage to the bonet, front bumper, grill and also has a rear bumper crack. The engine has also developed a fault, meaning it won't start at all. I can't afford to get it looked at/diagnosed, let alone fixed.

I've heard about the hire purchase agreement, which is in my finance contract...will I be able to do that, given the state of the car?

I know I can ring them, but I want all the advice I can get, so I don't just get fobbed off by the finance company.

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Daedroth

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I thought if the vehicle is leased/loaned etc then the vehicle is theres, ie they do the servicing, fix any issues (apart from accidental damage etc)

I'd take this on the chin, possibly ask your mum+dad, then learn how to drive :p

The care of the car is under my control, such as MOT, servicing, tax, etc. But the car technically belongs to the finance company until I've paid off the last payment. I had an accident last year, but haven't been able to afford to fix the damage.

The problem I have, is that the cost to fix the car might be as much as the car is worth, and I simply cannot afford that.

Grand Master

Detection

Posted
Posted

Not qualifying for Jobseekers would be because you either have Assets/Savings worth over a certain amount or a full time Income coming into the house you live in

So someone / Something you already have contact with should be able to help you ?

Grand Master

game_over

Posted
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I would ask them how much it would cost to pay off early, try to borrow the money off a family member, sell the car (even though you'll get much less due to damage) and then give the money to the family member to help pay off that debt.

DONT fall into arreas. Desperate for a nice car when i passed my test at age 18 i got one on finance but after a year started to struggle, i ended up up having it voluntarily repossessed because i couldn't afford to get the account up to date.. they auctioned the car, sold it for significantly less than it was worth... now they are chasing me for the 'outstanding amount' on my account.. a nice total of ?3400.. the car was only ?5000, i may have been nieve because i thought once they took the car it would all be over, you can imagine the shock when i got a letter 6 months later saying i owe over ?3400. If i thought this would happen i would have never given up the car.

The whole episode ruined me for a very long time, i fell deeper into debt with loans and overdrafts and i've only recently recovered the last couple of years. never again.

Grand Master

+Mirumir Subscriber¹

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Hey, man!

There are a few things you can do.

The worst thing is to do nothing, prolong this situation, and have your credit rating ruined.

And to go further, I need to have some things clarified.

I assume it's a financed car and not a lease. Correct? If it is so, who is its owner on the title? Is it you or the financing company?

Veteran

Daedroth

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I know how much it will cost to settle the agreement early, but can't afford to pay that.

My parnter works full time, but doesn't earn enough to support both of us.

The finance company own the car until I've paid off all the finance.

I'm not eligable for job seekers as I haven't paid enough NI between 2009 and 2011 apparently, which is stupid because 2009 to 2010 I was claiming job seekers while working 8 hours a week, after graduating from college. Since 2010 to 2012, I have 2 years of full time work, where I paid my full NI. But they won't count the 2012 year for some stupid reason. Something which I'm going to protest.

The accident which caused the front end damage was my fault, something which I obviously regret, but the excess on my insurance was too high for me to afford it at the time.

Proficient

iKenndac

Posted
Posted

I gotta be honest - I think you need to suck it up and talk to the finance company. The longer you leave it, the less friendly they'll be to the idea of helping you out. Quite often they'll let you temporarily pause or reduce payments while you get back on track.

Grand Master

Hardcore Til I Die

Posted
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I had a high voluntary excess, which I couldn't afford to pay.

I know you don't want to be lectured, but you should always make sure you can afford the excess. It might seem like a good idea to choose a high excess to get your monthly payments down, but it all goes to pot when an accident actually happens.

That said, I would go to the Citizen's advice and see what they think you should do. They might be able to help you write a letter to the finance company explaining the problems you're having. They deal with this sort of thing all the time.

Grand Master

Detection

Posted
Posted

I'm not eligable for job seekers as I haven't paid enough NI between 2009 and 2011 apparently, which is stupid because 2009 to 2010 I was claiming job seekers while working 8 hours a week, after graduating from college. Since 2010 to 2012, I have 2 years of full time work, where I paid my full NI. But they won't count the 2012 year for some stupid reason. Something which I'm going to protest.

Claim Income Based JSA instead of Contribution based then

Mentor

|Rapture|

Posted
Posted
Claim Income Based JSA instead of Contribution based then

This. Speak to your local Job Centre.

Also, tell the finance company the situation. They'll probably be more interested in making some sort of payment plan than repossessing your mashed up car. You don't want something like that stuffing up your credit rating either.

Grand Master

DrCheese

Posted
Posted

I can't claim income based JSA, because it's based on household income/hours worked. I'm not working at all, but my girlfriend is going 37 hours a week, meaning I am ineligible.

wut

I have friends who claimed it whist living @ home and both parents working o.O

Grand Master

Detection

Posted
Posted

I can't claim income based JSA, because it's based on household income/hours worked. I'm not working at all, but my girlfriend is going 37 hours a week, meaning I am ineligible.

Which was what I said earlier, you either have savings/assets or are living with someone working full time, ask her for help.

EDIT - I lost my job and a similar thing happened to us, I couldn't claim with someone working full time living with me, she had to 'move out' ;) ;) so I could claim until I found work, which I have recently done so now she can 'move back in' ;) ;)

Mentor

1WayJonny

Posted
Posted

Worked in auto industry for 12 years.

1) Not sure about UK but in USA if you get a repocession of the car voluntary or involvtary it stays on your credit for a minimum of 7 years. Not sure about UK but this will destroy you in the future when it comes to buying a home or renting. New cars, crdit cards etc... - Crdit History is exactly that HISTORY.

If you have debt of $20,000 in bad credit and pay it all off the BAD marks will stay for 7 years, at ALL COST DO NOT LET THIS HAPPEN. If you even call the bank they will let you hand it in but nail you credit their is no different to a repo vs and involuntary repo

2) If you had a accident your fault or not your insurance would fix it but you have to pay a deductible to claim the insurance and this you may not have paid for. You should as this is deprciating the car you own but I udnerstand your sitiuation.

3) Based on 1 and 2, dude to save you credit their is no way out of this car PERIOD unless you sell it. If you do sell it for $15K but your load is $18K then you will still need to pay the remainder of the balance to close out the loan. Sell it (which will be hard) or pay it off.

4) Based on 1, 2 and 3 - I would get a job shoveling crap and picking up garbage for now to hold you over and allow you to pay. The next year or two might be painful but its a lot less painful then in 5 years you on yoru feet again and having saving but no one will lend you money becasue of this history.

Worst feeling in the world to be doing good and have a company your doing business with bring this up. Even though you making money now.

UK is different than USA and this is based on my knowledge if I am off or wrong about thing said then please consider.

Hope this helps.

P.S. You are 1/2 through you loan you will KILL you future if you let this repo.

  • 2 weeks later...
Veteran

Daedroth

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Thanks for all of the replies, they've been an interesting read.

Now I have a job lined up, I'm thinking about one of two options now, regarding trading the car in at a dealership and buying a newer second hand car.

1) Trade the car in, with 1000+ finance owed on it...let the dealer pay off the finance and buy another car, also on further finance.

2) Trade the car in, with 100+ finance owed on it...let the dealer pay off the finance and buy another car...but take a personal loan from the bank...because the interest rates are lower, and the car would be mine, rather than a finance company so it can't be reposessed.

Grand Master

+Mirumir Subscriber¹

Posted
  • Subscriber¹
Posted

Thanks for all of the replies, they've been an interesting read.

Now I have a job lined up, I'm thinking about one of two options now, regarding trading the car in at a dealership and buying a newer second hand car.

1) Trade the car in, with 1000+ finance owed on it...let the dealer pay off the finance and buy another car, also on further finance.

2) Trade the car in, with 100+ finance owed on it...let the dealer pay off the finance and buy another car...but take a personal loan from the bank...because the interest rates are lower, and the car would be mine, rather than a finance company so it can't be reposessed.

Unfortunately, there isn't enough information to figure out which is the best option for you. So you need to talk to your financial planner or whoever you're dealing with to figure out which is the most affordable and financially sound plan. You need to compare your total debt and monthly payments and decide if another car is something that you want/need or would you rather pay off the current debt and think about buying a new car later.

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