Need to downgrade vehicle

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Bionic

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Hi. SO has been jobless for over a year and it is now having a financial impact. I have decided to get rid of my Audi and buy a used Polo.I'm currently having an issue trading the vehicle since its only a year and a half and has a residual attached.What are my options? I have heard that banks don't allow to load a shortfall from a trade in to a vehicle that is older than 3 years. If I had a choice I would not mind buying an older model but the residual is limiting me and is my biggest mistake.Any advice is appreciated.Thanks.
 
A residual is just a fancy way of saying that at the end of the contract you still owe e.g. 30%.

Ask what your settlement value is.

If it's more than your trade in value then you're screwed and might as well rather keep it.
 
biometrics said:
A residual is just a fancy way of saying that at the end of the contract you still owe e.g. 30%.

Ask what your settlement value is.

If it's more than your trade in value then you're screwed and might as well rather keep it.
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agree
 
Bionic said:
Well have done that and dealerships are offering about 50k less than settlement. Am I allowed to load on a car that is more than 3 years?
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Didn't even know you could do that.
 
Are you sure you'd actually be gaining anything here? If the car loan is underwater and you roll that into a new loan you'd likely just end up with a worst car and not much better month cash flow esp after commission & costs.

Besides I doubt any sane dealer would let you roll 50k onto a brand new one let alone a 3 year old 2nd hand - the collateral value of the car won't back it. Maybe I'm wrong about that though. Fazda will know the answer no doubt...
 
Bionic said:
Well have done that and dealerships are offering about 50k less than settlement. Am I allowed to load on a car that is more than 3 years?
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AFAIK you can load the value as long as it doesn't go over the retail price of the new car.
 
It can go over the retail price of the car to an extent - but they'll penalise you on interest.

But like someone said, how much do you actually save by doing this?
 
Have you tried the option of getting a personal loan to cover the shortfall? If a bank does allow the personal loan or overdraft or a combination, then do a calculation on your total repayments and see if it still makes sense to trade in your Audi for a Polo.

For reference, 50000 @10% over 60 months would be about 1000 a month in monthly repayments. Hopefully, payment difference between the Audi and the polo is greater than 1000 to even start making sense. Also, remember the Audi has a motorplan whereas the Polo would not be covered, especially a 3 year old.
 
InternetSwag said:
Time for a new SO imo.

Who the **** is jobless for a year?
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Yoh, try be less judgemental bro.

My wife was, but she was a foreigner new to South Africa, with no local work experience and hadn't managed to complete her degree overseas. White + foreign + no tertiary education + local job market = out of luck for ages

We got through that phase, but it also wasn't easy for us.

Good luck Bionic - I agree that keeping your car for now is probably the best bet, you've got nothing to gain by taking a short-term loan at higher interest to cover the gap, and getting a lesser car (which will end up costing you the same with the additional loan factored in).

For us, the solution was for my wife to just get a basic entry-level job where she was paid practically nothing ... after six months she could move onto something better, and hasn't looked back.
 
Trying to settle one debt by dumping the money into another is not clever, and in the Motor Industry, unless you are dealing with a total shark, very few dealers will load a vehicle more than about 10k.

I have done it to help out a friend, who wanted to buy a new Forester, but still owed too much on his previous car. In his case, we made it very clear to him that he was taking a risk, as that is what it is - in the end you have, say a Polo, that is worth 80 000 on the books, but it is yours for a mere 120 000. In his case he had a Forester for 420 00 whereas the retail was 390 00 - but he's quite happy, as he intends to keep the car forever.
 
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