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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

To sell my car to pay off debts?

37 replies

Kindfulness · 10/03/2022 08:25

Hi all!

Knowing that second hand cars are worth quite a bit at the mo (Ours is probably work £6-7k from research)...

Would we be unreasonable to sell our car to pay off debt and then take out a new lease car on finance? (Debt of around £3.5k)

Our original plan was for me to get a few pay days behind me and pay off a chunk of our debt, and then look into a new car. However, is time of the essence? Should we look to sell our car sooner rather than later to cash in on the inflated values of second hand cars?

OP posts:

TillyTopper · 10/03/2022 08:32

Can you afford to do without the car? If you need it for work then it would be crazy to sell it unless there is good public transport. But if it's sitting on your drive and you can commit to only walking or public transport then why not. Certainly it would be a relief to pay off debts.

brainhurts · 10/03/2022 08:32

Do you need a car ?
How much would the repayment on the lease car be v cost of the monthly payment on the dept ?

alwayswrighty · 10/03/2022 08:34

So you'd be paying off one debt to take on another?

Aprilx · 10/03/2022 08:34

I don’t understand what you mean. What is the point of selling your car only to buy a new car shortly thereafter? Or as I say, I am I not understanding?

Note that the supply / demand / price of old cars and new cars is closely linked.

Valhalla17 · 10/03/2022 08:36

Why, to then just go back in debt on a car lease?

Glittertwins · 10/03/2022 08:36

You might find it hard to get a new car on a lease. Friends have been told that their new lease car has been delayed by another 6 months.

AllOfUsAreDead · 10/03/2022 08:38

@alwayswrighty

So you'd be paying off one debt to take on another?

This. Doesn't seem smart, unless you're going to pay off the debt and buy another car with the remainder of the money you got from your car. Which is doable as long as you arent expecting new or young.

girlmom21 · 10/03/2022 08:38

Wait times for new cars are astronomical at the moment.

That aside, there's no point paying of £3.5k worth of debt to then get into bigger debt.

Is there anyone who can loan you the money interest free if that's the issue?

drawingpad · 10/03/2022 08:49

Would we be unreasonable to sell our car to pay off debt and then take out a new lease car on finance? (Debt of around £3.5k)

Yes of course you would. Why is this even a question honestly OP I have seen some justification for people taking on brand new cars they can't afford but 'to pay off debt' takes the star prize.

Coffeetree · 10/03/2022 08:54

Am I understanding correctly, you are 3.5K in debt?

So sell your present car for 7K, pay off your debt, and depending on your circumstances either:

Buy a cheaper car, or
Do without a car

Don't get a car on credit, that's bananas!

Blossomtoes · 10/03/2022 08:55

Should we look to sell our car sooner rather than later to cash in on the inflated values of second hand cars?

Yes. The current over value of second hand cars won’t last for ever and now is definitely the time to cash in. My extremely financial savvy friend is bringing forward a new car purchase for this exact reason. Strike while the iron’s hot.

EdgeOfSeventeenAndThreeQuarter · 10/03/2022 08:59

Caution - are you sure you’d GET the credit for a new car if things are currently precarious?

Would be folly to rid yourself of a much needed asset only to discover there’s no way of replacing it!

3ormoredogs · 10/03/2022 08:59

We had a 9k car and a 5k loan/finance.

Sold car, paid loan and bought a 2k car. Kept 2k as an emergency fund.

The cheaper car is much more efficient than the expensive one ever was and it makes me happy knowing I haven’t wasted a fortune on it. I would never get a lease or PCP again.

MRex · 10/03/2022 09:06

It depends how much you need your car. Depending on where you live and how much you use it, a combination of public transport and taxis might well be cheaper for a few years while you get finances in order. From the prices, it sounds like your plan include downgrading the car for something cheaper, which definitely makes sense. Check that you can pay off the lease finance if you choose to, and that rates are fixed for whatever period you'll need to save up.

frownaminute · 10/03/2022 09:08

YABU, it's not going to help you if you pay off debts but take on another big financial commitment.

You need to look at how the debt built up. Are you living above your means? Is there any other way you can reduce outgoings to prevent you getting in debt again?

Nobody needs a brand new car or a lease car. If you need a car then sell the one you have and buy a cheaper one, preferably smaller that will also cost less on fuel and insurance. Think about whether you even need a car if you live somewhere with decent public transport.

Doveyouknow · 10/03/2022 09:11

The reason that the prices for second hand cars are so high is because the supply of new cars is limited. If you sell your car now, can you wait 6mnths + while you wait for the new one?

LampLighter414 · 10/03/2022 09:12

Do you own your car outright now?

And you mention you plan to lease. So you realise in 2 years or however long the lease is, you will not own a car. Similarly all cars are expensive, not just second hands one, so that lease will not be good value compared to what you could have leased a couple years back. I get the impression you are just thinking ooh we can get the debt cleared AND a shiny new car (with a corresponding debt attached) without really thinking about it.

If you own the car, keep it and pay off your debt with your income as it comes in. You will have a car you are not making monthly payments on and will have it to use for years to come with no need to hand it back to the dealer.

balalake · 10/03/2022 09:15

I'd suggest you sell and then live without a car. Or if getting another one, get a smaller car.

SpiderinaWingMirror · 10/03/2022 09:15

If you can find the lease deal you want AND the car is actually available then yes, sensible.
We gave up though because after 1 go of paying deposit and then being told its now 6 months, we simply bought another second hand car

Jmaho · 10/03/2022 09:18

The best plan if possible would be the sell your car, pay off debt. Put the rest into premium bonds maybe and do without a car until prices come down. Then buy a second hand cheaper car with the money

drawingpad · 10/03/2022 09:20

@SpiderinaWingMirror

If you can find the lease deal you want AND the car is actually available then yes, sensible. We gave up though because after 1 go of paying deposit and then being told its now 6 months, we simply bought another second hand car

Can you explain what is sensible? Selling a car you own to pay off debt and then taking on a higher debt in the form of a lease car is the opposite of sensible.

Foolsrule · 10/03/2022 09:20

I see what you’re getting at. If you’re paying say £300/month to clear current debt and could pay that on a lease on a new car, having cleared the pre-existing debt, you’re sort of in the same position but driving round in a shiny new car. And if you make money on the old car, that’s great. The only issue is - can you actually get hold of a brand new car? It’s the scarcity of supply that’s caused the uptick in second hand car prices in the first place. I do see what you’re thinking though and in some circumstances, it could makes sense, eg if the interest rate was lower on the lease scheme than what you’re paying to service your debt now.

Thinkingblonde · 10/03/2022 09:24

I’d sell the car, pay off the debt and buy a cheaper car with the cash left over.
I wouldn’t get a lease car/PCP , in three years time or however long the contract is for, you’ll be in the same position you are now.
My friends son got a car on one of those schemes, he didn’t have the cash to pay at the end of the contract so he had to return the car.

BarbaraofSeville · 10/03/2022 09:29

I do see what you’re thinking though and in some circumstances, it could makes sense, eg if the interest rate was lower on the lease scheme than what you’re paying to service your debt now

I agree, also if you're one of those people who spend a lot on fuel and could lease an electric car, so the saving on fuel goes a long way towards the cost of the car.

Otherwise, it's just increasing your debt significantly, if you can get a car at all.

If you could swap to a much cheaper car, pay the debt off and then save so you don't have to borrow to buy cars, that would be a good plan, otherwise it's keeping you in debt to maintain your lifestyle, which isn't a great position to be in.

Foxyloxy1plus1 · 10/03/2022 09:39

Get an interest free credit card and a direct debit to pay the debt off that way.

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