# Unable to pay the carloan



## tablesalt (3 Apr 2010)

A friend of mine is having a great difficulty paying his car loan. At this stage he owes a lot more for the car than the car is worth. He is looking at his options and thinking of giving the car back to the garage. It would of course mean that he would get a bad credit history, but he doesn’t care at this stage as he doesn’t see other options. Would the garage take the car back? How does it work? He has the car since summer 2008.


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## jack2009 (3 Apr 2010)

you friend will not get a bad credit rating as long as he keeps up the repayments on the loan. By selling the car it may take a bit of financial pressure off your friend but of course may feel like a waste of money but possibly the only option.


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## tablesalt (3 Apr 2010)

But with the car being worth much less than what he owes on it it doesn't seem to make sense for him to continue paying the loan. Thats why he wants to give it back. The question was would they take it if he stops paying? How does it work?


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## Sansan (3 Apr 2010)

Hi table salt, I am on typing this on my phone other wise I would post the link, but a member put up a post before about the "half rule" this is where if you have paid half the amount owed you can return the car and call it quits, his credit history will be unafected, if you search aam and type in half rule I am sure u will find it, or google it, I belive it is on the financal regulator web site, itsyourmoney.com or .ie sorry can put up link I'm at work, but has he just phoned the finance company and asked for a payment break or reduced payments also if he made smaller paymentts they might wipe the money owed and just stick it on the end i.e add a year extra to the term of the loan, worth a shot


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## samanthajane (3 Apr 2010)

Its not the garage he will need to give it back to, it's the finance company. I doubt very much the garage would buy it back from him. 

There is a half way agreement but your friend is a good year away from that so i dont think that is an option. 

Is he behind on payments? And the car has just decreased in value. If he gives the car back from my knowledge this is what will happen, The finance company will sell the car, often for much less than what it is worth, they mostly go to auction. What ever the car sells for will be taken away from the balanced owed ( often you will have fees as well so that makes the balance more cause they add it on ) your friend will then be responsible for the remaining balance, and they will chase you for it. 

It happened to a friend of mine a few years ago. She got loads of letters, got a court date, she didn't turn up, The court ordered a repayment plan. She never made a single payment, she got maybe 2 or 3 letters after that saying they would go back to court, but after that she's never heard a thing from them and that was about 3 years ago i think. 

I would tell your friend to think long and hard about his credit rating, it will stay with him for the next 6 years. You never know what might happen in that time. He could try and sell the car himself, he would probably get a bit more for the car but it wont be anywhere near what he's owes. He could then pay that money to the finance company and arrange a new payment plan extended over a longer time maybe to lower the repayments of the remaining balance. He will have to look into this more as I'm not 100% sure how it works. I know I've had a conversation about this with someone who had done this, but i cant remember if she paid the balance of the loan there and then with the cheques from the person that bought the car from her. I know the buyer had to make out the bank draft in the name of the finance company. There is something in the back of my head saying you cant do this, sell a car on with finance still outstanding on it even if you could arrange something with the loan company, cause if you then never carried on with the payments the car could be taken from the new owner. Maybe someone else on here will be able to help with that part that I'm unsure of. 

The only other option left is to just give it back, get the bad credit and deal with it. He'll have to go through all the letters and court dates ect. And just because my friend never heard anything else back from them doesn't mean he wont. 

Hope e manages to get things sorted out what ever he decides.


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## samanthajane (4 Apr 2010)

just to add on about the half way mark. He may be a few months away ( depending when in summer he got the car )  but if he could get those payments together and pay in advance, he can hand it back like sansan said. It's not so much the time frame of half way like i suggested it is about paying half the amount owed.

The only reason i didn't go into more detail with that is because if he can not afford to pay the monthly payments i didn't think he could come up with a good few grand, but thinking about it more thats probably his best way to go, maybe a credit union loan or a loan from friends and family.


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## tablesalt (4 Apr 2010)

I think he can try to continue for this half way rule. He is up to date with his loans. Im trying to search that thread with half way rule. Do you have a link, guys?
Thank you so much for posting!


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## samanthajane (4 Apr 2010)

lol I googled and it my own post that came up. I had to get rid of my poor car, i still miss it to this day, the good old banger gets me around but it's not the same haha. But it's wasn't so much about the half way rule my loan company were being a nightmare to deal with. 

From my experience what ever they say, advise or try to force on you let it go in one ear and out the other. From the day i told them i was doing this i had letters and phone calls offering me this that and the other. Not one of them benefited me, only the finance company. Yes they offered to extend the agreement to lower my repayments, just failed to mention the huge amounts of interest that would be added on. It is your legal right to hand it back, dont forget that.  I wouldn't bother letting them know now, your'll just be pestered by them. Keep making the payments, try and save up what ever he can, once he either pays up to the half way mark or pays in advance i'd give them about 4-6 weeks notice that you plan to hand the car back, that more than enough time for them to drag their heels. 

Be careful what you sign... the form i had posted out to be had loads of stupid conditions on it, it even said on the form i agreed to pay back the remaining balance, do they think i'm stupid. I rang them up they said it was a mistake and sent me out another form, i bet if i had signed it they wouldn't of said that. Make arrangements to drop the car back to them, it didn't say it on my form but if you ask for them to collect it from there is a charge of €500 odd euro. 

Only one more thing to clear up. Is the car private or commercial? If it is commercial? you wont be able to hand it back under the half way agreement.


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## samanthajane (4 Apr 2010)

http://www.askaboutmoney.com/showthread.php?p=780987

here's one that had a lot of replies so you should get a lot of information from this.

oh the edit button is working again, That link didn't really go where i thought it was ( didn't actually read it just saw it had 20 replies, sorry was a bit lazy ) but i have another one from the CIC http://www.citizensinformation.ie/c...rsonal-finance/loans-and-credit/hire_purchase


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## Havana (4 Apr 2010)

My experience when I was in the same boat. 
I found the bank very helpful. When I finally decided to hand the car back I was expecting them to sell the car and then give me a figure I owed. However on the day I handed it back they gave me a figure and worked out a payment plan for the balance that I could afford. This was alot less than I had expected it to be. 
Your friend should talk to th bank. i was nervous doing so but they were very helpful and understanding. While handing it back does affect your credit rating it's not as black a mark as repossession.


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