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HELP on how to get out of motor loan balloon

TCE home 2021 Forums Car finance HELP on how to get out of motor loan balloon

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    • #142128
      Mark higgins
      Guest

      I currently have a car on motor loan balloon but with personal circumstances changing I am struggling to keep up with payments.

      I got the car as a part exchange from existing finance where I had a lot of negative equity so they transferred this to my plan now.

      The car is a VW Golf 2012 and has been valued at around £4500-£5000 but I owe the company who I have my motor loan balloon with £7360 this meaning I still have negative equity.

      I have never missed a payment but want to do something to either reduce payments or get rid of it without it taking a hit on my credit file or having me fork out financially.

      Is there anything I can do?

    • #142162
      Stuart Masson
      Moderator

      Hi Mark. Depending on the type of agreement you have, you may be able to voluntarily terminate the contract. Have a read of our guide to voluntary termination.

    • #142166
      mark
      Guest

      Hi Stuart I was told you couldn’t VT on a motor loan balloon agreement is this incorrect information I have been given?

    • #142282
      Stuart Masson
      Moderator

      A “motor loan balloon agreement” is a name made up by the finance company, so you’d need to find out what the actual type of finance agreement is (PCP, lease purchase, conditional sale, contract hire, unsecured personal loan, etc.). This will help determine what rights you have.

      If you have the right to voluntary termination, it should say so in your contract and provide an exact amount for how much you need to pay to be able to VT the car.

      It may be an unsecured loan, whereby you own the car from the start but there is an option for the finance company to buy the car back off you at the end of the agreement in lieu of you paying off the balloon.

      A PCP agreement is a secured loan, whereby you do not own the car until you have paid off every last penny. You have the option to give the car back (it’s not yours) instead of making the final balloon payment to take outright ownership.

      Try asking for some advice at legalbeagles.info, which is an excellent free legal advice forum. They may have seen this before and be able to advise on it.

    • #142318
      Mark
      Guest

      Hi Stuart been told it’s motor loan plus agreement the company don’t hold any financial interest on the car do I have any options of lowering my payments?

    • #142354
      Mark
      Guest

      Hi Stuart would you suggest looking at lowering my monthly payments would that affect my credit file? Had it confirmed from the company that it’s a motor loan agreement so it’s kinda like a personal loan with a balloon payment they hold no financial interest in the vehicle

      • #143110
        Stuart Masson
        Moderator

        You could look at another personal loan from your bank if the interest rate is lower than what you have now, and use that to pay off this loan.

        We can’t make recommendations as to what you should or should not do. We can only advise how different products work, what rights you have and what you need to be aware of.

        You need to then take that information to make an informed choice on what is right for your situation. If you want specific advice, you need to talk to a financial adviser.

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