Car finance

[oOiluvfriendsOo]

Surely this can't be right?!

Family member takes a car out on HP.
£6000, paying back £12000 on 5 year agreement.
Makes 1 payment and finds themselves in difficulty. Asks finance company for 2 months to sort out finances and get back on track.
Finance company say can't help, only options are

Hand back car: sold at auction for likely £3000, so will owe £9000.

Voluntary termination: return vehicle and 'only' pay half of original £12000, so £6000.

So either way the finance company are recovering the cost of the vehicle plus £0000's more and then sell it on for even more profit.

That is robbery.

This is the argeement you sign up for. But a the interest should be between 500 and 1500 so not sure how its double. Sounds like a scam deal. Are you sure its not a pcp deal which is different to hp

Is this a finance deal through a dealership? Loan or pcp?

OP, are you saying the car cost £6000, but because of the finance, the total cost paid after 5 years would be £12000 ??

It's HP
Car cost £6000 and the interest taking it to £12000 over 5 years.

I don't know what company they have gone with but sounds like one that preys on people that can't get credit elsewhere.

Those figures are madness.

The finance company are not recovering the cost of the vehicle plus thousands more they are recovering the cost of the finance. Someone who took a £12k loan for a £6k car is responsible for their own poor decision here, not least when they couldn’t even manage more than one month’s repayment- they must have seen that coming.

Well i don’t disagree but people really are responsible for signing up for these crazy loans. It wasn’t forced upon them.

I'm well aware people are responsible for their own actions and should be aware what they are signing up to I'm just astounded at the figures.

It’s the way the agreements work. They will give you the money for a price, they want that price regardless.

It’s nothing new. Lenders have hiked interest rates up for high risk applicants for decades. They have to cover the losses somehow, and lending to people who are likely to default does result in more loss to the lender than ‘mainstream’ finance.

I think we are seeing more of these loans given second hand car prices have gone through the roof; the cash that people have (£5-6k) just doesn't get you that reliable, not young but not old-old, second hand car with decent mileage, it's usually £10k + now.

That being said - £6k isnt a hugely expensive, flash or even "naice" car so I feel empathy for the chap who needed to use this avenue to buy it.