Fair division of assets at end of relationship query
Discussion
I'll keep this very simple and intentionally vague/genderless to get fair answers.
Alex and Sam were together for over a decade. At the beginning of the relationship Alex had a car which was leased but at the end of the agreement both partners agreed to buy a new vehicle. Alex put around 10% of the purchase price forward as a deposit, but the monthly repayments were split equally. The loan was paid off some time ago and this car is now 9 years old and worth around £4,500.
During the relationship a second car was acquired on a PCP agreement. The deposit and monthly payments for this were split equally between both partners. The relationship is now ending and there are 17 monthly payments of £385 left on the agreement, along with a £12,700 final payment.
It has been agreed that the partners will take one car each, but they have not agreed how to fairly asses the value of these and how much one might owe the other to split these fairly.
What do the great PH collective consider to be a fair agreement in this situation, assuming all external factors are entirely equal?
Alex and Sam were together for over a decade. At the beginning of the relationship Alex had a car which was leased but at the end of the agreement both partners agreed to buy a new vehicle. Alex put around 10% of the purchase price forward as a deposit, but the monthly repayments were split equally. The loan was paid off some time ago and this car is now 9 years old and worth around £4,500.
During the relationship a second car was acquired on a PCP agreement. The deposit and monthly payments for this were split equally between both partners. The relationship is now ending and there are 17 monthly payments of £385 left on the agreement, along with a £12,700 final payment.
It has been agreed that the partners will take one car each, but they have not agreed how to fairly asses the value of these and how much one might owe the other to split these fairly.
What do the great PH collective consider to be a fair agreement in this situation, assuming all external factors are entirely equal?
Car 1 £4500 - original deposit = X.
Original deposit plus 1/2 X to Alex. 1/2 X to Sam. Made easier if one of the two wants the car and just pays the other one out. But be realistic on value and don't over value it. Best bet is take it to a dealer and get a proper trade price on it.
Car 2 is a liability. It's effectively a car on hire. It's unlikely to be worth more than the final payment so it's just a hire car for £300+ a month till the contract ends. Hopefully the person who's name it's in wants to keep it till end of contract, you've both had use of it up till now, the money already paid out is gone, let the contract keeper deal with it from now on but don't expect anything back from it. It only gets messy if the person named on the contract is Sam and Sam doesn't want it, and wants to use the non existent equity of the PCP car to pay for their half of car 1.
Original deposit plus 1/2 X to Alex. 1/2 X to Sam. Made easier if one of the two wants the car and just pays the other one out. But be realistic on value and don't over value it. Best bet is take it to a dealer and get a proper trade price on it.
Car 2 is a liability. It's effectively a car on hire. It's unlikely to be worth more than the final payment so it's just a hire car for £300+ a month till the contract ends. Hopefully the person who's name it's in wants to keep it till end of contract, you've both had use of it up till now, the money already paid out is gone, let the contract keeper deal with it from now on but don't expect anything back from it. It only gets messy if the person named on the contract is Sam and Sam doesn't want it, and wants to use the non existent equity of the PCP car to pay for their half of car 1.
Edited by wildoliver on Tuesday 9th July 10:08
isleofthorns said:
usual to include would be...
how much was the 10% deposit on the first car... and
what's the current value of car 2 - any equity in it?
About £3,000.how much was the 10% deposit on the first car... and
what's the current value of car 2 - any equity in it?
The car on finance is in negative equity and is likely to remain so with the goal of returning it at the end of the agreement had the relationship not ended.
wildoliver said:
Car 1 £4500 - original deposit = X.
Original deposit plus 1/2 X to Alex. 1/2 X to Sam. Made easier if one of the two wants the car and just pays the other one out. But be realistic on value and don't over value it. Best bet is take it to a dealer and get a proper trade price on it.
Car 2 is a liability. It's effectively a car on hire. It's unlikely to be worth more than the final payment so it's just a hire car for £300+ a month till the contract ends. Hopefully the person who's name it's in wants to keep it till end of contract, you've both had use of it up till now, the money already paid out is gone, let the contract keeper deal with it from now on but don't expect anything back from it. It only gets messy if the person named on the contract is Sam and Sam doesn't want it, and wants to use the non existent equity of the PCP car to pay for their half of car 1.
To confirm I understand what you're explaining here:Original deposit plus 1/2 X to Alex. 1/2 X to Sam. Made easier if one of the two wants the car and just pays the other one out. But be realistic on value and don't over value it. Best bet is take it to a dealer and get a proper trade price on it.
Car 2 is a liability. It's effectively a car on hire. It's unlikely to be worth more than the final payment so it's just a hire car for £300+ a month till the contract ends. Hopefully the person who's name it's in wants to keep it till end of contract, you've both had use of it up till now, the money already paid out is gone, let the contract keeper deal with it from now on but don't expect anything back from it. It only gets messy if the person named on the contract is Sam and Sam doesn't want it, and wants to use the non existent equity of the PCP car to pay for their half of car 1.
Edited by wildoliver on Tuesday 9th July 10:08
After deducting the £3,000 deposit for the first car, the £1500 remaining value is split and in theory if Alex keeps that car they owe £1500 to Sam.
Car two is just a monthly agreement and the one who keeps the car pays the monthly fee with the other partner having no further obligation?
wrencho said:
Together for a decade and quibbling over two cars, one of which is in negative equity?
I'd just take whichever car the other person doesn't want and move on...
So in theory you would let your ex keep a £4,500 asset while you inherit a £15,000 debt? That's generous of you.I'd just take whichever car the other person doesn't want and move on...
I'd say you need to write down the deposit by the same % that the vehicle has reduced in value
Then agree how much the car on finance is going to cost and split that when working out who gets what.
In reality it's the square root of f
k all, with the biggest issue being how to manage the cashflow of the financed vehicle if there isn't enough cash around to get rid of the liability now.
Then agree how much the car on finance is going to cost and split that when working out who gets what.
In reality it's the square root of f
k all, with the biggest issue being how to manage the cashflow of the financed vehicle if there isn't enough cash around to get rid of the liability now.Edited by TownIdiot on Tuesday 9th July 10:37
If you really want to be that way about then, whoever takes the finance car should be getting £2250 out of the first car + (17 * 385) / 2 = £3272.50 which equates to half the remaining rentals of the second car for which both partners are liable. Total of £5522.50
That would reflect that one partner is left with an asset whilst the other is left with a rental agreement to service and nothing at the end. It could be tweaked to cover the fact car 2 is no doubt nicer, but they may also get caught with additional fees on return.
As for wanting to take into account a 10% deposit after a 9+ year relationship, come on really!!, but if you must then you split the car 55/45 and apply the rentals on top.
That would reflect that one partner is left with an asset whilst the other is left with a rental agreement to service and nothing at the end. It could be tweaked to cover the fact car 2 is no doubt nicer, but they may also get caught with additional fees on return.
As for wanting to take into account a 10% deposit after a 9+ year relationship, come on really!!, but if you must then you split the car 55/45 and apply the rentals on top.
Edited by Zolvaro on Tuesday 9th July 10:48
Edited by Zolvaro on Tuesday 9th July 10:49
bricks said:
wrencho said:
Together for a decade and quibbling over two cars, one of which is in negative equity?
I'd just take whichever car the other person doesn't want and move on...
So in theory you would let your ex keep a £4,500 asset while you inherit a £15,000 debt? That's generous of you.I'd just take whichever car the other person doesn't want and move on...
It's not £15k debt, it's an ongoing hire agreement with a liability around £6.5k plus some risk of deductions when you hand back at the end of the term. For that the person that keeps the rented car gets a presumably nicer motor with warranty versus an older and potentially less reliable car.
Who is the primary user of each car? Whose name is the finance in?
Are these assets and liabilities all that are in play here? We're talking about a few grand between a couple who presumably are at least late 20's. It could be months wages or less, without some context it's difficult to see why over thinking it is required.
Nuclear option: Sell the owned car, terminate the lease on the other and use proceeds from the sold car to fund this and the split anything left. Yes it's a silly idea but this way nobody "wins".
I'd calculate the present value of the portfolio of cars, loans/liabilities and divide it by two. I'd value both cars at their current market price. You then allocate assets, liabilities and put in/take out cash to achieve an even split. This means ignoring the 10% deposit from 10 years ago which is going to be worth bugger all anyway. This also means agreeing that the benefit of having the newer car is fairly reflected in its current market price, which is pretty much the definition of "price" if the market is operating efficiently.
Edited by ATG on Tuesday 9th July 11:02
GCSE Maths is different to what it was like in the 80s!
I'd split the value down the middle, maybe bias it towards the person with the larger income if that person is feeling generous.
I didn't care too much when I divorced but then she didn't want to take the piss either so it all worked out well. Although I do miss that really good dance CD that she took - can't remember what it's called either.
I'd split the value down the middle, maybe bias it towards the person with the larger income if that person is feeling generous.
I didn't care too much when I divorced but then she didn't want to take the piss either so it all worked out well. Although I do miss that really good dance CD that she took - can't remember what it's called either.
UpTheIron said:
bricks said:
wrencho said:
Together for a decade and quibbling over two cars, one of which is in negative equity?
I'd just take whichever car the other person doesn't want and move on...
So in theory you would let your ex keep a £4,500 asset while you inherit a £15,000 debt? That's generous of you.I'd just take whichever car the other person doesn't want and move on...
It's not £15k debt, it's an ongoing hire agreement with a liability around £6.5k plus some risk of deductions when you hand back at the end of the term. For that the person that keeps the rented car gets a presumably nicer motor with warranty versus an older and potentially less reliable car.
Who is the primary user of each car? Whose name is the finance in?
Are these assets and liabilities all that are in play here? We're talking about a few grand between a couple who presumably are at least late 20's. It could be months wages or less, without some context it's difficult to see why over thinking it is required.
Nuclear option: Sell the owned car, terminate the lease on the other and use proceeds from the sold car to fund this and the split anything left. Yes it's a silly idea but this way nobody "wins".
bricks said:
wildoliver said:
Car 1 £4500 - original deposit = X.
Original deposit plus 1/2 X to Alex. 1/2 X to Sam. Made easier if one of the two wants the car and just pays the other one out. But be realistic on value and don't over value it. Best bet is take it to a dealer and get a proper trade price on it.
Car 2 is a liability. It's effectively a car on hire. It's unlikely to be worth more than the final payment so it's just a hire car for £300+ a month till the contract ends. Hopefully the person who's name it's in wants to keep it till end of contract, you've both had use of it up till now, the money already paid out is gone, let the contract keeper deal with it from now on but don't expect anything back from it. It only gets messy if the person named on the contract is Sam and Sam doesn't want it, and wants to use the non existent equity of the PCP car to pay for their half of car 1.
To confirm I understand what you're explaining here:Original deposit plus 1/2 X to Alex. 1/2 X to Sam. Made easier if one of the two wants the car and just pays the other one out. But be realistic on value and don't over value it. Best bet is take it to a dealer and get a proper trade price on it.
Car 2 is a liability. It's effectively a car on hire. It's unlikely to be worth more than the final payment so it's just a hire car for £300+ a month till the contract ends. Hopefully the person who's name it's in wants to keep it till end of contract, you've both had use of it up till now, the money already paid out is gone, let the contract keeper deal with it from now on but don't expect anything back from it. It only gets messy if the person named on the contract is Sam and Sam doesn't want it, and wants to use the non existent equity of the PCP car to pay for their half of car 1.
Edited by wildoliver on Tuesday 9th July 10:08
After deducting the £3,000 deposit for the first car, the £1500 remaining value is split and in theory if Alex keeps that car they owe £1500 to Sam.
Car two is just a monthly agreement and the one who keeps the car pays the monthly fee with the other partner having no further obligation?
However if Sam will take the millstone because it's in Sam's name, then Sam has just done Alex the favour of the century. So Alex would be an arse if he didn't bung Sam £2250 and move on with life. End of the day your quibbling over 1500 quid here. It's peanuts.
Whoever ends up with the millstone should end up with the better financial position, if it's Alex then it's only fair that Alex gets a decent chunk of car 1 back, especially if it's always been Sam's car and Alex effectively loaned/gave Sam 3k to buy it. Perhaps on this basis 3k and Sam keeps the car is the sensible approach.
Just sit down and both work out on a sheet of paper what each of your best and worst case scenarios are and try to draw a line somewhere down the middle where you both lose out, both winning isn't an option, just both lose a fair amount.
Don't be a dick though and try to lumber Sam with the millstone and nothing to show from car 1. Unless of course the breakup was due to Sam playing hide the rugby ball with your local club.
StuTheGrouch said:
Sell the £4.5k car, pay off the remaining agreement and hand back the second car. Each walk away debt free and no car. Start again.
This. You don't inherit any debt. It isn't an obligation to purchase the PCP car, and you'd be mad to if it's in negative equity. Give it back and walk away.Gassing Station | Finance | Top of Page | What's New | My Stuff