Downgrading a car on finance

C

Cicero

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I've been thinking recently of trying to downgrade and save on my car repayments and whatnot, because I'm toying with the idea of emigrating and joining other family overseas.

I need to save cash to support myself through the move, and for all the admin costs. Obviously the more cash I have the easier it is on the other side too.

I currently have a 2011 Hyundai i20, and while its not particularly fancy, it does cost me R3300/month on repayments and insurance. Since I'm not thinking long term, just staying about a year longer in SA or so slowly getting rid of stuff...I thought an 'easy' way would be to downgrade to a car worth about R40-50k. Then just before I leave get rid of that.

So I've got some questions...

How does it work if you go to a dealer with a car worth more than the car you want to buy? Do they still do trade in help? Would they settle the finance loan, then have to open another one for the new car? Is this just a stupid idea all together?
How much is a trade in for a 2011 Hyundai i20 1.4 also - if anyone knows offhand?

Any input would be appreciated
 
Depending on the term of your finance, you probably will not get enough on trade-in to settle your loan.
 
This sounds like a bad idea. Just keep the I20 and save somewhere else, like cellphone, etc
 
You most likely won't be able to get finance for the type of car your looking at as most in that price range are too old to finance. Also you should by now be sitting with a car where the resale value is more than the outstanding capital but not much.

There websites to assist with book value but it all depends on condition and mielage - I would say your looking at R85K-R95K for that car.
 
Break even for financed cars is usually around 24 months+. In other words, you will only owe less than the current market value after paying off the car for 24 months or more. (This is for finance without a deposit and without a balloon). With a balloon it is even worse, like 36 months+ or even never.

e.g After 24 months, a new R200 000 car, you will owe +- R130 000 which is probably a fair trade price for a 2 year old R200k car.
 
Market value on auto is R129 000
Market value on manual is R124 300
Depending on Km's and condition as well as any extras.

Market is trade+retail / 2

Hope this helps.

If you owe less than it's worth the ok go for sale/trade otherwyse you'll get screwed.
 
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