Some adviice : Residual, no money, new car

[Brenden_E]

Consider a 530d next time

View attachment 215760

Haha WTF!

 

[Brenden_E]

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

There's a 24 hours pawn place here in Centurion that does that. 24 Hours. You know bad life decisions are bound to be made.

 

[*Medusa*]

Tell him to take the knock. Sell the car for what he can and take out a further loan to pay off the difference and then to stick to public transport until that loan is paid off.

 

[XennoX]

**** me. How did he pass the affordability test?

Some options:

1. He realises he made a stupid decision and that he is out of his depth, takes the knock and sells the BMW. He then pumps the money directly into the loan and sits with the debt until it is settled. When the residual is due he better have the money to settle within 30 days otherwise the bank isn't going to be happy.
2. He realises he made a stupid decision and that he is out of his depth, takes the knock and surrenders the vehicle to the bank who then auction it and he sits with a bigger debt than in (1).
3. He realises he made a stupid decision and that he is out of his depth, takes the knock and sells his paid off vehicle and pumps the money directly into the outstanding amount. He then asks the bank to capitalise the amount, thus reducing his instalments and hopefully significantly.
4. He realises he made a stupid decision and that he is out of his depth and attempts to reduce costs as much as possible. Sticking to pap for breakfast, 2 minute noodles for lunch and chicken and spinach for dinner for the next 5 years. No social life is allowed either.

Realistically only the first 3 options are viable.

Tell him to take the knock. Sell the car for what he can and take out a further loan to pay off the difference and then to stick to public transport until that loan is paid off.

Another loan? I don't think the bank will give him another loan nor allow him to extend his mortgage. That leaves only unsecured debt (personal loans) which mean sky high interest rates (>20% pa), no thanks.

 

[Sinbad]

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

can only do that if it's paid off
also lol at people calling a 520i an awesome car.

 

[Foxhound5366]

**** me. How did he pass the affordability test?

Some options:

1. He realises he made a stupid decision and that he is out of his depth, takes the knock and sells the BMW. He then pumps the money directly into the loan and sits with the debt until it is settled. When the residual is due he better have the money to settle within 30 days otherwise the bank isn't going to be happy.

1. 
   
   Can't sell car privately, because bank won't release registration papers before amount has been settled in full. New owner wouldn't wait for him, so he'd need the shortfall cash ready at the same time if he wants to go that route.

 

[XennoX]

Can't sell car privately, because bank won't release registration papers before amount has been settled in full. New owner wouldn't wait for him, so he'd need the shortfall cash ready at the same time if he wants to go that route.

In that case his only realistic option is to surrender the car.

 

[Foxhound5366]

In that case his only realistic option is to surrender the car.

I think his best bet is what you've already suggested - he needs to phone his finance provider, declare that he can't afford the payments, and request that they give him permission to trade-in the car at a dealership that offers the best value (which he'll probably have to prove to the finance provider because they'll be unhappy to see the fixed asset disappear) and then re-finance the balance of the loan at an affordable amount (which is still going to work out less than trying to take out a short-term unsecured loan for R150 000 or whatever).

Net result? No car, payments of R3 000/month, and a bad mark on his credit record (although maybe the finance provider will not go that far if he proves that he's a willing payer and trying to actively solve the situation).

 

[XennoX]

I think his best bet is what you've already suggested - he needs to phone his finance provider, declare that he can't afford the payments, and request that they give him permission to trade-in the car at a dealership that offers the best value (which he'll probably have to prove to the finance provider because they'll be unhappy to see the fixed asset disappear) and then re-finance the balance of the loan at an affordable amount (which is still going to work out less than trying to take out a short-term unsecured loan for R150 000 or whatever).

Net result? No car, payments of R3 000/month, and a bad mark on his credit record (although maybe the finance provider will not go that far if he proves that he's a willing payer and trying to actively solve the situation).

My gut feel is that the finance institution will make his life hell if he ever needs to get credit again.

 

[Foxhound5366]

My gut feel is that the finance institution will make his life hell if he ever needs to get credit again.

Um, I might be wrong but I think that your credit record only extends two years back by law. If he can't manage his debt, a two-year breather might do him good.

 

[Messugga]

Still can't believe that a 30 year old bought a 520i. Talk about giving up on life and getting old before your time...

Shh. We're contemplating kids and this thread has me considering getting rid of the 86 and making the sucker a low ball offer

 

[FiestaST]

This is my fav shape 520i



Even though the 520i in question probably looks like this

 

[supersunbird]

Um, I might be wrong but I think that your credit record only extends two years back by law. If he can't manage his debt, a two-year breather might do him good.

Yes, that's your accounts history, not judgements and defaults.

 

[Pho3nix]

Sorry all.
Been busy with exams and work queries.

Will update thread a little later this afternoon.
Seen some good suggestions, will post some feedback about what he says about that too.

 

[the eskimo]

As mentioned previously, probably the best option is to let the lender know he can no longer afford the car due to a change in financial situation (even if there isn't really one). He will need to trade the car in at a dealer, and sign an AOD (acknowledgement of debt) and pay off the shortfall as agreed.

The other option is to enter Debt Counseling. If your friend can find a good DC (they are very scarce), they should assist him in negotiating reduced payments (perhaps interest only) for a while while he sorts his mess out.

 

[Brawler]

also lol at people calling a 520i an awesome car.

Whats wrong with it? Its an awesome big luxobarge.

 

[Sinbad]

Whats wrong with it? Its an awesome big luxobarge.

with 135 kilowatts. Snooze fest.

 

[Brawler]

with 135 kilowatts. Snooze fest.

0 - 100 in 7.9. Thats not bad for what it is. I doubt people buy them form performance reasons.

 

[Sinbad]

0 - 100 in 7.9. Thats not bad for what it is. I doubt people buy them form performance reasons.

snooze fest
but granted not as bad as I thought.
Personally I'd rather buy near the top of a smaller range than at the bottom of a bigger range. Better specs etc. And probably better value retention as well due to higher desirability.

 

[Splinter]

**** me. How did he pass the affordability test?

Some options:

1. He realises he made a stupid decision and that he is out of his depth, takes the knock and sells the BMW. He then pumps the money directly into the loan and sits with the debt until it is settled. When the residual is due he better have the money to settle within 30 days otherwise the bank isn't going to be happy.
2. He realises he made a stupid decision and that he is out of his depth, takes the knock and surrenders the vehicle to the bank who then auction it and he sits with a bigger debt than in (1).
3. He realises he made a stupid decision and that he is out of his depth, takes the knock and sells his paid off vehicle and pumps the money directly into the outstanding amount. He then asks the bank to capitalise the amount, thus reducing his instalments and hopefully significantly.
4. He realises he made a stupid decision and that he is out of his depth and attempts to reduce costs as much as possible. Sticking to pap for breakfast, 2 minute noodles for lunch and chicken and spinach for dinner for the next 5 years. No social life is allowed either.

Realistically only the first 3 options are viable.



Another loan? I don't think the bank will give him another loan nor allow him to extend his mortgage. That leaves only unsecured debt (personal loans) which mean sky high interest rates (>20% pa), no thanks.

Or he can simply let the bank repossess it; and live with a bad credit rating. Which he is likely to have regardless of the above options.