How am I going to finance this? So stressed

[Whattodor]

I am a single parent and rely on my car for work. My car finance ends in Feb 2027 and I owe a balloon payment of around 8k if I want to keep the car.

I keep being contacted about buying another one and going onto a new finance plan and although I’d love a new car I just don’t want to keep throwing money away. Plus the plans they are offering are hundreds a month! I don’t have the 8k but could probably get together 3k by February. How will I finance the remaining 5k? I can’t work without my car. We live in the countryside. It has 50,000 miles so I think it’s worth keeping rather than a new one? It’s 7 years old.

it’s moments like this I feel so alone

Have you asked if you can finance the balloon payment with the same provider? Essentially just keep paying monthly until it’s paid off.

Can you take a bank loan?

Do they not have an option to refinance?

I don't think anyone ever actually pays those balloon payments they just refinance.

What car is it? £8k on top of the monthly payments you’ve already made sounds a lot for a 7 year old car unless it’s something expensive.

Car finance like this always seems a con to me.

If the monthly payments are affordable I’d hand the car back, take out a loan paying back the same you are now and get a different car with that loan.

At least then once you’ve paid back the loan the car is yours and no balloon payments to worry about.

⬆️

people don’t tend to pay off the car finance, sometimes you might have equity in your existing car to put toward the deposit on a new one. Or some dealers do 0% deposit. Then you start again on a new car. Alternatively you can refinance the existing car at the end of the initial term.

What's your budget vs what do you need?

What are you paying for the current car?

Second hand cars are expensive at the minute.

Worth seeing what it's worth online and seeing if it's more or less than the balloon payment.

You can just hand it back and start again if the balloon payment is more than the car is worth

I'd get a bank loan and pay it off over a couple of years. This is why i have avoided pcp deals.

Why don’t you get a loan and buy a different car?

What was your plan when you took out the finance. You knew there was a balloon payment . So you either return it enter into a new one, lease or buy a second hand. Not sure why you seem surprised tbh

Taise the 3k. Give back the car and purchase something very small and cheap. Start saving the equivalent of the monthly payments to your next car.

Don’t use pcp deals . Hand the car back.
buy a cheap car that you will own.

We have recently had to do the same. We had a balloon payment of £20k on a 3 year old car due. The low interest rate offered when we bought the car wasn’t available on the re-financing option, interest would go from 3% to 10.9%.

We wanted to keep the car but not at 10.9% interest for 3 years. We got a bank loan instead and paid the car off completely. Bank loan repayment 6.7%. Every little helps!

@Whattodor refinance the car, check the interest rate car manufacturer is offering and then shop about to get a loan somewhere with a better interest rate. Good luck!

Could you get a 0% credit card? Then be disciplined about repaying as though it is s loan

I would hand the car back.

Lease another new one. Don't take out another PCP. Leasing is often cheaper, as you have to give the car back at the end of the term.

No point getting an old, second -hand one on a budget, which could then get costly in repairs, especially if you depend on the car for work.

At least with a new car, you can be sure that if driven relatively normally, on a 3-year term, on your mileage, you are unlikely to be needing to replace the tyres, and brakes, which is more likely to happen sooner on a 2nd hand car.

What on earth are people thinking leasing cars? It’s madness. Get a bank loan for a second hand Skoda Fabia and drive it for 15 years or so. You’d save so much money, and would get a reliable car.

I’ve had my Skoda Fabia 10 years. I’ve paid for brake pads and tyres and that’s it. It was 2 years old when we got it and dirt cheap.

There's limited difference between taking a loan out and finance tbh. A 15yr old Fabia will be a leaky bucket - especially in the footwells of the rear seats....

A second hand fabia with 50,000 miles on it is still around 10k, and it wouldn't last another fifteen years even if you had exceptionally low mileage.

I drove a cheap basic car round for the last 7 years and put aside £200 a month to then buy a new one. I'm just about to buy the new one, and have been offered £800 for my 12 year old one as part exchange! I'm not buying a new car though, as the depreciation is too high!

People lease because it often needs less deposit, the lease covers typical depreciation of the cars value, so after 3 years they can hand it back and then just lease another. As they're new then less maintenance costs too.

I took a loan out with Halifax to cover the balloon payment and I'll own it by the end. I set my monthly payment the same as it was x

I've got a 15 yr old Fabia and it doesn't leak at all, anywhere. It's also really reliable, and clean air zone/ULEZ compliant. And only cost £2k...

So I'm in the "buy a used car outright" camp!