I have Negative Equity on my Current Car. Can I Use the Loan to Clear The Debt?

Hi, 

I have a 58 plate Vauxhall Astra which I bought in Feb 2012 for £6000. I pay £253 a month and recently asked for a settlement amount which was £5793 and current dealership offers are between £4000 and £4800. 

Could I get a better finance deal on a newer Vauxhall Insignia?

Asked by Daniel Dunne
January 11, 2014

Hi Daniel, thank you for your question.

If you can get £4800 for your current car it looks as though you're in £1000 negative equity. Would you have any cash at all to make up some of the difference as this would help us get you into a better deal?

We can help people who are in negative equity and if you've had a recent clean credit history i'd like to think we can get you a better rate than you're currently on. Please apply when you're ready and if approved you can choose a car from any dealer and we do provide a no obligation quote. Kind Regards, Rachel

Tim Carpenter
Tim Carpenter Car Finance Expert

Liked by 7 People

5 years
Total cost of credit £ 2000
Total repayment £ 2000
48 monthly
payments of
£ 245 98

Rates from 7.9%: the exact rate you will be offered will be based on your circumstances, subject to status.

Representative example: borrowing £6,500 over 5 years with a representative APR of 21.9%, an annual interest rate of 21.9% (Fixed) and a deposit of £0.00, the amount payable would be £172.09 per month, with a total cost of credit of £3,825.54 and a total amount payable of £10,325.54.

We look to find the best rate from our panel of lenders and will offer you the best deal that you’re eligible for. We don’t charge a fee for our service, but we do earn a commission. This does not influence the interest rate you’re offered in any way.


I have existing finance related questions

Hi, i have an existing finance agreement for 5 years and it's my 1st year only. Another problem is that there's a damage in the car bumper due to an accident (I've hit an animal on the road).

I would like to downgrade my car because my circ


January 11, 2014

Unfortunately, every car loan is tailored to your individual circumstances and the vehicle you’ve financed so you can’t just transfer a car loan from one car to another.

But that doesn’t mean you’re stuck with a car you no longer want or can’t afford. You do have options, even if you haven’t yet reached the end of your agreement.

Pay the settlement figure

If you’d like to settle your finance early and own or sell your car, you can request a settlement figure from your lender. Typically, the further you are into your finance agreement, the lower this figure will be. Once you’ve settled your finance, you’ll be free to do what you like with the car: keep it, sell it or part-exchange it to use as a deposit in a new agreement.

Refinance my car

Want to change your agreement but keep your car? You can look to refinance instead.

When your finance agreement can last anything up to seven years, it’s understandable that your circumstances can change. If you need to reduce your monthly outgoings or your financial situation has improved over time, a refinance deal could work for you. 

Refinancing is when you look for a new finance agreement (usually with a new lender) to pay off your existing loan amount with a better interest rate or lower monthly repayments. You’ll settle your existing finance with a one-off payment, which will be covered by the new lender or incorporated into your new lender.

But keep in mind that switching to a loan with lower repayments might not be the best choice long-term. Take note of the total amount payable on the new loan and be aware that having lower monthly payments over a longer loan term could mean you pay back more overall.

What about negative equity?

If your car is currently worth less than the outstanding finance, then you’re in negative equity. But you don’t have to be stuck there! Here at CarFinance 247, we work with a panel of lenders and some can offer negative equity car finance. With these loans, you can combine the cost of clearing your negative equity and the price of a new car into one affordable monthly payment.

Tim Carpenter
Tim Carpenter Car Finance Expert

Liked by 5 People

Hi, I am a stay at home mother/housewife, my husband and i recently sold our home and would like to get another mortgage but have hit a bit of a brick wall. We had lots of debt that we have now paid off so we are waiting for the credit rating to go up (re


January 11, 2014

No, unfortunately you can’t transfer an existing car finance agreement to someone else.

Every car finance agreement is tailored to your individual circumstances and, as nobody else will have exactly the same circumstances as you, the agreement can’t be transferred.

If you’re having trouble making your repayments or someone else wants to buy your car, there are other options you can explore.

Ending my car finance agreement early

Depending on the type of agreement you have, you don’t have to wait until the end of your term to settle your finance.

Instead you can:

  • Pay the settlement figure – contact your lender to find out how much you’ll need to pay to settle your car finance early

  • Opt for voluntary termination – if you’ve paid 50% of the total amount payable (including fees, interest, and the balloon payment in a PCP), you can simply hand the car back

  • Refinance your car – you could apply for a new finance deal (usually with a new lender) to reduce your monthly payments or use any positive equity in your car as a deposit in a new agreement

If you’ve chosen to pay the settlement figure on a hire purchase agreement, the car will now be all yours and you can sell it or gift it to someone else. But if you’ve chosen to refinance instead, then you may be able to apply for joint car finance and add someone else to the new agreement.

Joint car finance

Don’t want to go it alone? Here at CarFinance 247, we work with a panel of lenders and some of them can help people find joint car finance.

Restrictions can apply – some lenders ask that you both live at the same address, for example – but your dedicated account manager will be able to help guide you through the process.

Tim Carpenter
Tim Carpenter Car Finance Expert

Liked by 177 People

I bought a car in November 2013 under a 3 year Hire Purchase agreement. I want to buy a new car as I'm not happy with my current car anymore. I recently had a settlement figure of 7,313.54 which I think is more than the car is worth. The car is worth aro


January 11, 2014

Yes, even if you have outstanding finance on your car, you may be able to get a new one before your agreement ends.

It all depends on your personal circumstances and the type of car finance agreement you have, but there are three main options you could consider:

Pay the settlement figure

You can end your existing agreement by paying the settlement figure. You can usually find your settlement figure on your finance agreement or you can contact the lender directly to find out how much it’ll cost to settle your loan in full. Typically, the further you are into your agreement, the lower your settlement figure will be.

Opt for Voluntary Termination

Under UK law, you have the right to choose voluntary termination and hand the car back as long as you’ve paid 50% of the total amount payable. This doesn’t just mean 50% of the amount you’ve borrowed though, it also includes any fees, interest, and the balloon payment if you’re in a PCP agreement.

Refinance your car

Refinancing is when you take out a new finance agreement to pay the balance on your existing car finance loan and get a new one. You’ll be able to settle your current finance with a one-off payment and, depending on the deal, this payment could be covered by the new lender or incorporated into your new loan amount.

What if I’m in negative equity?

If you’ve found yourself in negative equity, don’t worry – you don’t need to be stuck there forever! Here at CarFinance 247, we work with a panel of lenders and some of them can provide negative equity car finance. With these loans, you’ll be able to combine the cost of clearing your negative equity and the price of a new car into one monthly payment.

Tim Carpenter
Tim Carpenter Car Finance Expert

Liked by 12 People

Hello, i have come to the end of my finance agreement and have been asked to pay off the baloon payment or hand the car back. I'd like to keep the car if possible so can you refinance my baloon payment? You help / advice would be appreciated :-)


January 11, 2014

The good news is that, here at CarFinance 247, we work with a panel of lenders and some of those can refinance the balloon payment on a PCP deal.

This would allow you to pay off your balloon payment and keep your existing car with a new finance agreement in place.

However, we can’t guarantee that we’ll be able to help as everyone’s circumstances are different and we’d need to look at your individual details to find out if we can match you to one of our lenders.

Get a quote to find out more. Rates from 6.9% APR. Representative APR 24.9%.

Tim Carpenter
Tim Carpenter Car Finance Expert

Liked by 14 People

Hi, I have an Audi A5 black edition which I took out on finance in September. My settlement agreement comes to approximately £33,000.

The monthly payments are more than I can afford. Would I be able to trade in or swap my car for something

Asked by Eisha
January 11, 2014

Hi Eisha, thank you for your question.

As you only recently took out finance on your Audi A5 you may well be in negative equity. Do you know what your car is currently worth (trade value) as if this is below your settlement figure amount you may need to make up the difference in cash. Would this be possible?

We'd love to get you into a cheaper car but you need to find out this information first. When you have the details please come back and let me know. We can then guide you through the process of part exchanging your car. Please make an application here when you can proceed and once approved we provide a no obligation quote and you can buy a car from any dealer. Kind Regards, Rachel

Tim Carpenter
Tim Carpenter Car Finance Expert

Liked by 7 People

Hi, I have a car on finance through Audi and am 2.5 years through a 3 year agreement. I have read though many of the posts on here but still have a few queries.

At the end of the 3 years I will not be able to afford the final payment. Is the


January 11, 2014

Under UK law, you can give your car back to the finance company, known as voluntary termination, as long as you have repaid 50% of the total amount payable (not just of the total amount borrowed, you need to include interest and fees, and the balloon payment on a PCP as well). If you’ve not already paid 50%, you can also choose to make a one-off payment to make up the difference.

You’ll need to contact your finance company to kick-start this process but you’ll be able to find the total amount payable, as well as the termination amount, on your car finance contract. Keep in mind that if your car has any damage – beyond everyday wear and tear – you may also face additional charges. 

If you’re not able to pay 50%, contact your finance company to find out what your settlement figure might be and whether it may be possible to sell or part-exchange your car.

When you’re ready to find finance again, make an application to find out more. Rates from 6.9% APR. Representative APR 24.9%.

Tim Carpenter
Tim Carpenter Car Finance Expert

Liked by 11 People

Hi. We have a car on a 36 month term with an existing finance company and have 18 months left. We are now expecting our first child and need a bigger car. We haven't had the car valued properly. We have £5k left on the car and it's roughly worth £5500-6ki


January 11, 2014

Whether you’re able to get a new car loan and settle your existing finance or not depends on a few different things.

First, you’ll need to contact your finance provider and get your settlement figure.

  • If your car is worth more than the settlement figure, you may be able to use the difference as a deposit towards a new car.
  • If your car is worth less than the settlement figure, then you’ll be in negative equity. If this means that you can’t pay the settlement figure, you may need to find another form of finance to settle your existing finance.
  • If you’ve paid more than 50% of the total amount repayable, you may be able to voluntarily terminate your hire purchase finance agreement.
  • If you’ve taken out a personal loan to finance your car, you may be able to sell it privately and clear the loan before applying for a new car loan

When you’re ready to apply for a new car finance agreement, get a quote to find out more. Rates from 6.9% APR. Representative APR 24.9%.  

Tim Carpenter
Tim Carpenter Car Finance Expert

Liked by 9 People

Hi, I have an Audi on finance which I have had for only a few months. We were honest about the high mileage I would be doing so pay a high monthly fee. However, due to change of circumstances I am now not working. Can we change the agreement to a lower a


January 11, 2014

Unfortunately, you can’t simply chance names on a finance agreement. Each agreement is tailored to the holder’s individual circumstances and, as someone else’s will be different, it can’t be easily transferred. If you wish to buy someone else’s car, they’ll need to settle the finance first and then you can apply for a new agreement in your own name. Get a quote to find out more. Rates from 6.9%. Representative APR 24.9%.

Tim Carpenter
Tim Carpenter Car Finance Expert

Liked by 6 People

Can you refinance a car loan?


January 11, 2014

Yes, you can refinance a car loan. We work with a panel of lenders and some of them are able to help with refinancing, subject to approval. If you’re looking to take out finance to pay your PCP balloon payment or your circumstances have changed, get in touch to explore your refinancing options. Get a quote to find out more. Rates from 6.9% APR. Representative APR 24.9%.  

Tim Carpenter
Tim Carpenter Car Finance Expert

Liked by 59 People

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