Some adviice : Residual, no money, new car

[HapticSimian]

...

I would do what has already been stated in this thread, get a settlement letter from the bank, sell the car for as much as you can, and take a knock on the difference between the two. Don't let it get to the point where the bank sends the debt (car?) collectors. Rather contact them and see what arrangement can be made.

B

There's a bit of a problem with that: unless the outstanding capital balance can be settled the car isn't his to sell. Further, as we're talking credit for an amount greater than R250k, the bank can (and will) charge 3 months' interest as an early settlement penalty if 90 days' notice of intent to settle isn't given.

That said, getting a settlement letter and a proper valuation on the car will at least answer the question of how big a gap there will be to bridge. A quick look at AutoTrader shows there are a few comparable cars advertised at or around the R500k mark. Expect trade-in offers of R50k - R80k below that. Your friend isn't in a good spot.

 

[Pitbull]

His mother is paying his bond and he still has the car. Should have gotten rid of it yesterday!

And no matter what. He needs to get rid of it himself. If they bank repos it they will sell it on auction for anything they can get and he'll still have to pay the balance. At least selling it himself he has some control. If that vehicle sells on auction for R 200k he'll still be in debt for the balance...

 

[Brenden_E]

And no matter what. He needs to get rid of it himself. If they bank repos it they will sell it on auction for anything they can get and he'll still have to pay the balance. At least selling it himself he has some control. If that vehicle sells on auction for R 200k he'll still be in debt for the balance...

Nothing in my post alluded to selling it on auction. I've sold all my cars privately within a few days.
30 years old and let's his mom pay for his bond while he's careering around in his BMW. Should be damn ashamed!

 

[Foxhound5366]

You know, maybe we need to think about this for a bit.

Money is time, right?

So if you're considering this guy might make a R100 000 loss if he tries to sell his BMW now already (and I'd say that's actually a conservative loss, given that there are a LOT of BMW 5 Series on the market), we're talking about 10 months' worth of repayments.

Is his situation likely to change in the next ten months? Depending on his skill levels, they just might ... and considering that he was approved for a R500 000 car in the first place as a 30 year old, his affordability level must be sufficiently high (would I be wrong to guess an income of north of R35 000)?

Hell, maybe it's not a bad idea to hold onto it ... at least he'll have a great car for the next few years, or at least until the resale value and what he owes equals out (still around four years). Losing the car AND incurring R100 000 of debt at a higher interest rate (e.g. a loan at 18%) isn't going to do his situation any favours, because then he's going to have the loan repayments AND the additional repayments for some car (which he most likely won't get until his affordability improves again).

Just a thought. Use it, don't use it.

 

[Brenden_E]

You know, maybe we need to think about this for a bit.

Money is time, right?

You are right. The longer you keep a car you can't afford the more it's going to cost ya.

 

[Foxhound5366]

You are right. The longer you keep a car you can't afford the more it's going to cost ya.

Err, this is a simplistic view. Is it just me, or are you only starting to sound jealous that you're not driving a 5 Series here?

When you pay a lot for a car, you're paying for engineering, safety, quality, enjoyment and ... don't forget ... the sheer luxury of transport at your convenience. Once you strip away the bank's interest and depreciation, the car is still a physical asset worth quite a lot of money, and it's still better than blowing money on the credit card for holidays (for example).

You seem to think that every time you make a monthly payment, that is money down the tubes. Nope - it's a payment for another month with an awesome car.

Yes, obviously all cars depreciate, but that depreciation is the steepest right at the start and later starts to even out.

What you're advocating is that your friend who is financially screwed at the moment loses his new car, converts his car's depreciation into immediate short-term debt (at a higher interest rate), and then sits with no wheels and debt to pay back ... compared to stomaching R9 500 repayments somehow until he gets a high-paying job again (and this depends on his skill levels).

Potentially your friend could save himself from this situation quicker by just getting a new job for himself. Only if that's not an option should he think about cutting his losses.

 

[Brenden_E]

If you wonder about the thought processes of someone that gets into this position and worse, read this post ^

 

[Foxhound5366]

If you wonder about the thought processes of someone that gets into this position and worse, read this post ^

And if you're wondering about the thought processes of somebody who will drive a Toyota Corolla for the rest of his life, read this post ^

 

[supersunbird]

And if you're wondering about the thought processes of somebody who will drive a Toyota Corolla for the rest of his life, read this post ^

You say that like its bad thing?

 

[Brenden_E]

And if you're wondering about the thought processes of somebody who will drive a Toyota Corolla for the rest of his life, read this post ^

I've already posted video of what I drive, and it's not a Corolla. That being said, I'd rather drive a Corolla and go live it up with my family around the world with the change.

That you think driving a Corolla is a bad thing says a lot. Makes me wonder how long before you post your financial sob story in here. If you buy a car to stroke your ego it can only end in tears.

 

[Foxhound5366]

That you think driving a Corolla is a bad thing says a lot. Makes me wonder how long before you post your financial sob story in here. If you buy a car to stroke your ego it can only end in tears.

Where do you get off being so smug, Brenden? I understand the undeniable quality of expensive cars, and for that you need to pay. If you cannot afford it upfront, you then need to pay interest too, and that's the cost of the thing. If you don't like the cost, don't buy it; if you do accept the cost, live with it and look past it to actually enjoy what you purchased in the first place.

There's a reason we don't all shop at Pep Stores - we accept that you sometimes pay extra for nice things. If this guy had a salary where he could afford a BMW 5 Series so young, well done to him!

In my first job I only earned R5 000 a month, and I went out one month and bought myself an XBox 360 for R3500 with it. The receptionist at that company gave me such grief over that decision, and you know what? She's still a receptionist, and I'm no longer earning only R5000. Think about that for a while.

Some people over-extend themselves, sure ... but sometimes you have to be prepared to accept the cost of your dreams, and work yourself into a position to afford them. To keep trying to live 'within your means' is to limit yourself to the smallest, grayest dreams you can.

If this young guy wanted to live a little, good on him. If he now needs to tighten his belt and get a new job rapidly to get out of a hole, many of us have been there before, and will be again, no matter how much smug preparation we put into staving off the future.

I proposed an alternative to your 'he must sell the car and his dreams, and publicly proclaim that I'm smarter than he is', just because you're jealous about his enjoyment of his cool car and willingness to dream big. If you want to belittle that, go right ahead ... just think twice.

 

[Brenden_E]

Diagnosis: beyond help. You can't seem to fathom the context of this story. HIS MOM is paying his bond.

You also don't understand the dream big saying at all. You dream big in ambition. You don't dream big on spending way more than you have on depreciating assets. That's not dreaming big, that's making the guy rich who is dreaming big while you remain poor paying off your luxury "arsehatt".

P.S You don't need a ridiculously expensive car to live a little. You can live a lot without spending a dime.

 

[FiestaST]

Diagnosis: beyond help. You can't seem to fathom the context of this story. HIS MOM is paying his bond.

You also don't understand the dream big saying at all. You dream big in ambition. You don't dream big on spending way more than you have on depreciating assets. That's not dreaming big, that's making the guy rich who is dreaming big while you remain poor paying off your luxury "arsehatt".

P.S You don't need a ridiculously expensive car to live a little. You can live a lot without spending a dime.

Short & to the point, agree with your pov

 

[HavocXphere]

To keep trying to live 'within your means' is to limit yourself to the smallest, grayest dreams you can.

Be sure to post on mybb when that blows up in your face.

(I agree with you that paying for quality is worth it but not when it means living beyond your means)

 

[Foxhound5366]

Brenden, it's a car loan. Bonds are for houses.

Also, how is his MOM paying for his bond, when presumably the affordability check would have been done on him in order for him to be the owner of it?

If his mom's helping him make ends meet now while he gets back onto his feet, so what? Parents help their kids. The knee-jerk solution to that STILL isn't sell the car because he is enjoying himself more than you are, and sit with a vast amount of unsecured debt (unsecured debt = zero asset, just a pile of money to pay back with nothing to show for it).

Yes you can live your life always trying to buy the cheapest thing on the menu, and have fun doing that. Don't criticise everybody who doesn't live that way, or rejoice when those who don't end up going through unrelated financial difficulties (presumably this guy isn't in financial trouble because he bought the car solely).

 

[OrbitalDawn]

Brenden, it's a car loan. Bonds are for houses.

Also, how is his MOM paying for his bond, when presumably the affordability check would have been done on him in order for him to be the owner of it?

If his mom's helping him make ends meet now while he gets back onto his feet, so what? Parents help their kids. The knee-jerk solution to that STILL isn't sell the car because he is enjoying himself more than you are, and sit with a vast amount of unsecured debt (unsecured debt = zero asset, just a pile of money to pay back with nothing to show for it).

Yes you can live your life always trying to buy the cheapest thing on the menu, and have fun doing that. Don't criticise everybody who doesn't live that way, or rejoice when those who don't end up going through unrelated financial difficulties (presumably this guy isn't in financial trouble because he bought the car solely).

No, his mom is paying his bond because he doesn't have any money.

And if you read the OP you'd see he has "serious money problems".

Really not sure why you think Brenden is advocating "buying the cheapest thing on the menu". He has a pretty sweet car, actually. He's just being sensible about it, meaning he can actually not crash and burn because of pointless ego-stroking, as the guy in the OP is.

 

[Gaz{M}]

To avoid situations like the OP, then I suggest always putting down a decent deposit if you want to finance an expensive, newer car. That way, if you do need to sell it in the near future, the deposit covers most if not all the depreciation.

I would recommend a 20% deposit. Bonus - if you keep the car 3-4 years, then you will owe much less on it than it is still worth, so the difference can be used as a deposit on another car.

 

[DrewChan]

Brenden, it's a car loan. Bonds are for houses.

Also, how is his MOM paying for his bond, when presumably the affordability check would have been done on him in order for him to be the owner of it?

^ did not read thread

 

[Quantum Theory]

Saw a billboard today. Pawn your car and keep driving it... Sounds like a plan

 

[FiestaST]

Consider a 530d next time