Help: Should I give my car back?

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Xyn101

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Hi guys.

I am in bit of a pickle and I was wondering if someone could give me some advice.

I've been working at a new job for about 6 months now. Bought a new car 4 months ago. But recently my job has become so intolerable that I cant work there anymore. I recently got an offer from my old university to go back and complete my PhD. They will provide me with a bursary of R120 000 next year (R10 000 a month.) and I am really considering it. My current annual package is R350k, so I am taking a huge pay cut. The only problem is, I wont be able to afford my car payments (which totals R7000 a month with insurance). I asked my finance company (MFC) what I can do, and I applied for a residual (which only brings my instalment down with R700 a month.

This situation is temporary, since I only need 15 months to complete my doctorate.

The only option I can still think of is giving my car back to the bank. But that will leave a black smudge on my credit record, and I will never beable to buy a house or car or get credit of any kind ever again.

Could someone please give me some advice :(
 
Firstly, I hope your doctorate isn't in finance or commerce ;) How much is the debt for and how much have you paid so far? I wouldn't go the residual route as you might not find work that quickly after your doctorate and bursary run out.
 
Well, its in psychology. My current interest is R106 507 and outstanding capital is R250 731.. Total R 357 238.

I'm really stressing about this. I don't know what my options are, but what I do know is I cant stay at this job for the next 6 months. It is literally killing me.... one day at a time
 
I asked them if I sell my car, pay the money into the bank and ask them to refinance a new car with the capital outstanding on the old car.... and they said they don't provide that option. Hence the stress :(
 
O and thank you for taking the time out to speak to me about this. I really appreciate it
 
Can you not sell the car privately then and use the proceeds to settle the amount? Assuming that the car hasn't depreciated that much in 4 months.
 
The settling amount was (two weeks ago) R263 000. I don't think I would get more than R200 000 for it... which means I still owe R63 000. Which I do not have. do you think I could possibly negotiate with a car dealer to trade in my old car for an old one on his lot and pay in the difference like that?
 
A new guy who's just started working does not need such a fancy car, honestly, especially not if you thought you might go back to studying. It was crazy to buy such an expensive car and get in so much debt after working for such a short time. My suggestion is come to terms with the idea that you're losing the car and 'grieve' (so to speak) the loss, sell the car, then buy yourself something like a cheap scooter or motorbike to get around - you can get very decent little ones for anywhere between R5K and R15K. Then you only need to pay the difference on the car of R63K or whatever off, which will come to what, R600/month, you can afford that from your bursary money. In a few years time, you'll have your PhD, have recovered from the loss, should be earning well again if you're good at what you do, and will be a little wiser having learned a lesson.

Edit: Surely you can sell the car e.g. to a dealer? If the bank won't let you even sell the car, that smells fishy to me, even though I don't know much about this.
 
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If you haven't paid off a substantial amount, then the title to the car can't be transferred because it still technically belongs to the finance company. I would speak to them about it. You won't be the first person in this position. Credit records can be fixed if you pay later.

The PhD sounds intriguing. Will it get you a better job in the long run, or confine you to academia?

In any case, leaving your current job is a must. It isn't worth enduring the daily grind if it's that bad. Just do it in an orderly fashion. Think about it over the holidays?
 
Not an expert on the topic but surely there must be a way out of the contract e.g. what if you get retrenched from your job? or the company closes its doors? In these days of the NCA, the consumer is supposedly better protected than they were a couple of year ago. Understandable that the finance company doesn't want you trying to get out of the contract a few months in but things happen, maybe you need to obtain some legal advice? Not insulting the people here but it sounds like you're in a bit of a situation that requires professional knowledge, something like this could escalate if you don't speak to the right people.

EDIT: On a side note I also think you need financial advice. Even though you're earning R30k per month, you shouldn't spend >23% of it on a vehicle. I bought a perfectly adequate brand new vehicle this year (third car and first new one) and it would only cost ~14% of what you're earning. Granted it's probably not as fancy as yours (Corsa Essentia 1.4) but think what you could do with the extra R2,700 per month. On the other hand, if you don't have any other monthly expenses I suppose you could kind-of warrant spending that amount on a car. But you could also save it, invest and/or buy property and be a wealthy man owning a fancy car and only working when and how you want to, instead of being just a man, who hates his job and is financing his fancy car. Just some thoughts.
 
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You were earning R30k a month and purchased a car costing R7k a month? There's your problem, right there.
 
Yea this is an interesting dilemma.

If you go for a trade-in, the dealer will have to pay YOU [since your car will be worth more than the car you obviously want to get] . I doubt any dealer will do that.

If you sell the car and pay off the loan, you will come up short as you say.

If the bank takes the car and "refinance" your loan so you can get a cheaper car, that would be ideal , but somehow i don't think banks do that [it's not in their interest to do so] .

I would consider maybe this route [not sure if it's viable], sell the car, pay the loan as far as you can, and ask the bank for a 2nd loan for the cheaper car [i.e. 100k loan].

i.e. Lets say your loan is 300k , you sell the car for 240k and pay that into the loan . You are 60k short, if the bank don't want to adjust the loan, then you just pay the 60k off over the full period [5 years] at hopefully a much reduced rate per month . Then you take out a 100k loan and buy a cheap car. Surely this can be done? So you have 2 loans, of total 160k to pay off , which is better than 300k surely?

Now if the bank can simply kill the 300k loan and refinance you with a 160k loan [the 60k shortfall + 100k for new car] then it would be ideal, but they tend to lock you tight into these car loans, so might be easier to get another loan [while you are getting a high pay ] ?
 
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I don't see that much of an issue with R30kpm and R7kpm salary?

If he's got no wife, kids or other 'costs', but a fancy car while young. That's what I tell myself anyway ;)
 
Bronzed_Skarab said:
You were earning R30k a month and purchased a car costing R7k a month? There's your problem, right there.
Click to expand...

I know a CA who's paying R13k for his car on a R50k salary. Take away tax and whatnot and he's spending about half of his money each month on a car and he's in finance. People have really screwed up priorities these days.
 
Talking about what he has done already is water under the bridge.

MFC/Wesbank etc will not approve a deal that uses more than 25% of your salary (gross) - so obviously the OP qualified on those grounds in the first place.

A couple of options.

Go back to the original dealer, explain your predicament and see if they will do a buy back. If you then go for a cheaper car, there is usually enough meat in the deal to inflate the price of the new (cheaper) car and refinance a new deal. On the 10k/month story you will be approved on a monthly repayment of up to R2500....obviously try and keep the new repayment as far below that as possible.

Other option is to try and sell it privately. If you paid 350k 4 months ago, you can virtually ask for the same price on a private deal, unless you were ripped off on price in the first place. Even if you drop 20k, you will then have enough left to settle the outstanding amount, and start off a whole new deal on a MUCH cheaper car.

Sadly, this sort of thing should be a warning to young guys going out and getting themselves into maximum debt in order to drive a fancy car. It's just not worth it!
 
What car is it.Maybe we could point you in the right direction as to where you might be able to get rid of it.
 
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