Financing New Car...and an Offset Mortgage

[jonnylarge]

Hi All,

Not sure where this thread may go but this seems like a good place to get advice.

I have a car on finance - currently £149 a month with a £16k balloon payment due in January 2011. We also have an offset mortgage, with some savings that are currently offsetting the mortgage - it is from these savings that the balloon payment will be paid.

I can't help but feel that, rather than complete the balloon payment in January, I should engineer things so that I continue to pay a monthly amount and leave the savings where they are - continually offsetting the mortgage, and be in the position where I don't truly own the car and the finance company do (and potentially duplicate this cycle).

The problem is, I can't see the detail beyond this open-ended ideal. I guess I will need to replace my car in January to make things happen, but I'm flexible either way? Getting rid of the car brings it own problems - the dealer says it's lost 20% in 14 months, whilst a private sale won't necessarily net the full second-hand value either (as it costs a bit to look after).

Can anyone offer me any advice?

TIA.

[AppleMan]

Sounds like you probably have a PCP or Lease Purchase deal.....the principle idea if these is to shorten customer change cycles and get you buying a new car more often. This works well for the Dealer in that a new car is sold. For you the customer this is also good news. The older cars get the more items need replacing and the higher the running costs become... Potentially the bigger repair bills will 'marry' you to the car and you'll end up driving a ten year old shed. If you part exchange with the dealer and buy again you get a new car no MOT to worry about 3 years warranty and a lot of manufacturers offer a 3 year service plan.....worry free motoring for three years and then repeat.

Haggle over all aspects of the deal. Get the most you can for you car and negotiate on what you pay for the new car. If you buy from a dealer at the end of a quarter who needs units to get to target you could get a stunning deal!

Finally, PCP's should be taken with a low deposit otherwise when you repeat purchase your payments will increase unless you put the same deposit in again....10% is an ideal figure

Hope this helps

Your payments sound low and final payments sound high....I hope you didnt get sold a 5 year deal with a large final payment?

[hornetrider]

How about getting a credit card specifically for the purpose, which has 0% on purchases for the first year? Pay off the balloon with the 0% then you have a further year to pay off the balloon with no further charges.