Agility Finance

tylo

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Hi guys

Im desperately seeking help.

Due to the recession and buying a house with lots of work, we really need to get rid of our baby, C250 CDI Sport.

We took it out over 3 years on agility finance, but when called merc finance about what options we have for handing back the car, she told me the only options we have, is to sell the car (prob worth less than the outstanding finance!) or we pay 95% of the remaining finance, which defeats the whole purpose.
We are 2 years into the finance....is there anything we can do?

im desperate and dont know what to do.
 
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tylo

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right, finally got some figures

the settlement figure is about £20,000 (original value about £31,000)
Book value is £17-18,500
I tihnk we have paid around 24-25 monthly payments
 

munafb

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how much was the gauranted value at the end of the term.
 

David Nock

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It's cheaper for you to keep it for the final year than it is to settle early. Presumably you'll need a car so keep that one and get rid once terms up.

S'right....

As I see the Agility System, you have negotiated a loan at a reasonable finance rate (6% or so?) and you are paying monthly payments which are less than they would be normally i.e. to a bank, because the main chunk of repayment is only due after 3 years.

It just so happens that MB calculate a final value of (more or less) what the car will be worth at the end of the Agility. So you have to pay the big settlement money either in a year's time.....or cut the loan short, in which case MB are letting you off this coming year's interest....(that's the 5% reduction).

So unless you can clear the loan now which unfortunately seems unlikely from your post, you can best buy some 'time to pay' by keeping the car another year.

Hope that's clearer. Not much help I'm sure but I don't think MB are ripping you off....that's how the scheme works to keep the monthly repayments low.
 
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tylo

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It's cheaper for you to keep it for the final year than it is to settle early. Presumably you'll need a car so keep that one and get rid once terms up.

I have an old Disco jeep that i use in winter anyway, as the merc is absolutely useless in winter, justs seems crazy aswell to be paying £360 a month for a car that has to sit doin nothing for 3 months of the year.

I would like to add at this point...it was not my idea to buy a rear wheel drive when we live int he highlands! lol
 
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tylo

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how much was the gauranted value at the end of the term.

I have no idea, merc finance wont speak to me as im not named and my partner is out of contact working away, he told me to try and find out our options, without callin merc first....doh!
 
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tylo

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S'right....

As I see the Agility System, you have negotiated a loan at a reasonable finance rate (6% or so?) and you are paying monthly payments which are less than they would be normally i.e. to a bank, because the main chunk of repayment is only due after 3 years.

It just so happens that MB calculate a final value of (more or less) what the car will be worth at the end of the Agility. So you have to pay the big settlement money either in a year's time.....or cut the loan short, in which case MB are letting you off this coming year's interest....(that's the 5% reduction).

So unless you can clear the loan now which unfortunately seems unlikely from your post, you can best buy some 'time to pay' by keeping the car another year.

Hope that's clearer. Not much help I'm sure but I don't think MB are ripping you off....that's how the scheme works to keep the monthly repayments low.

thank you, this makes sense, unfortunately half the point of getting rid of the car and subsequent finance is to be able to pay the rest of our outgoings, so this doesnt look like its going to end well.

Do you think Merc would extend the finance to bring down the monthly payments? Or if i told them I was made redundant they would come to somekind of agreement?
 

Rory

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These PCP deals are arranged in such a way as get around the normal consumer credit act laws which allow you to hand back the car once you've paid half the amount owing - with a PCP you don't reach the halfway point until very near the end of the deal. Another thing people don't realise is the GFV is only guaranteed at the end of the deal - hand it back early and the car may be valued lower.

They're a trap and I don't like them. But people are encouraged to take them as they make expensive cars appear to be more affordable.
 

Simon21

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I have an old Disco jeep that i use in winter anyway, as the merc is absolutely useless in winter, justs seems crazy aswell to be paying £360 a month for a car that has to sit doin nothing for 3 months of the year.

I would like to add at this point...it was not my idea to buy a rear wheel drive when we live int he highlands! lol

Fit proper winter tyres to it and you'll be amazed at the difference. It snows in Southern Germany a lot more that most of the UK, and slightly more than even where you live.
 
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tylo

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Fit proper winter tyres to it and you'll be amazed at the difference. It snows in Southern Germany a lot more that most of the UK, and slightly more than even where you live.

thanks, we did put winter tyres on last year, made some difference, but ended up using the 4x4 as it could just get through anything and was much much safer.
 
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tylo

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These PCP deals are arranged in such a way as get around the normal consumer credit act laws which allow you to hand back the car once you've paid half the amount owing - with a PCP you don't reach the halfway point until very near the end of the deal. Another thing people don't realise is the GFV is only guaranteed at the end of the deal - hand it back early and the car may be valued lower.

They're a trap and I don't like them. But people are encouraged to take them as they make expensive cars appear to be more affordable.

Your right Rory, and the worst bit is....my partner used to be a carsalesmen and used to sell pcp and finance to everyone, knowing he was ripping them off.....then persuaded himself it was a good idea for him to get it! Dunce!

It just shows you, when you want something, all reasoning goes out the window!
 

David Nock

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thank you, this makes sense, unfortunately half the point of getting rid of the car and subsequent finance is to be able to pay the rest of our outgoings, so this doesnt look like its going to end well.

Do you think Merc would extend the finance to bring down the monthly payments? Or if i told them I was made redundant they would come to somekind of agreement?

MB Finance might do something, I just don't know.

I do believe they will allow an extension to a 3 year scheme, but I wouldn't have thought they would want to allow you to reduce any of the monthly repayments.

In raw financial terms and as you say the car's just sitting around, then if only you could it would make sense to sell it and pay the required settlement now. The trouble is then, by the sound of it you'll have to find £1500 or so immediately to do that?
That's like 4/5 months to pay now......immediately......but you are then off the hook for the last 6/7 months payments? Probably a no go but I have to mention it.

Otherwise I do feel for you. The Agility worked well for us with a 2009 CLK and we've paid it off early 'cos without a doubt we wanted to keep the car.
But we always knew it was an HP agreement with a massive back end payment which we would have to make or hand the car back with nothing to show for it.
It seems you personally have to continue the agreement (talk to MB and be upfront to see if they can do anything) or sell it like I said above and get out (i. e. hand it to someone else early).

With these schemes you're only paying for the car's depreciation, not any of it's residual value after 3 years and in return you're like the caretaker. At the end of the deal you can buy MB out or give them the keys back.

The scheme is about finance not about the car: the car is not cash....it's just that MB make the final cash payment more or less the same as the car's 3 year old value.
 

jberks

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As I see it, all you can do is speak to the department that deals with arrears and explain you don't want to fall behind. The may be prepared to cut their losses but it will no doubt impact your credit rating.
Don't feel so bad, we all get locked into deals that made perfect sense at the time only to kick ourselves later.
 

drdel

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I can tell you as an ex-dealer principal car financing it very profitable which means they're usually confusing for the customer. In fact most sales-staff have no idea of the liabilities people are getting saddled with. Get a loan and pay cash is always the cheapest in the end because by dealing with a bank you can fix exactly what is happening.

All these deals rely on the fact that you're paying to use somebody elses money.

If your concern is cash flow you need to decide whether over the next 4/5 years ( I know this isn't the deal) if there is a better way to finance your situation.

You must do some sums for each month for the 48 or 60 months the add the total for keep the car and for getting shot - it may be a bit depressing but at least you'll know the truth about your real options.

I'd suggest you might be better off (in total) if you could raise a 'personal' loan (or increase a mortgage) over the longer period to clear the car loan enabling you to sell it, this stops road tax, maintenance and insurance costs.

It may cost a bit more in total cause of the longer time horizon and thus the interest adds up but it might help your short term cashflow and make it simpler to deal with just a straightforward loan.
 

gizze

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If they have told you there is £20k outstanding you could take a loan out over 5 years but that would be more expensive, at 6% apr it would be £380 a month over 60 months.

Someone like Alphera may refinance it for you over say 48 months with a balloon.

You could probably get them to do it with a 40% balloon, so £8000 at the end, which would cost you £320 a mont, but is that really worth it?

You only have 12 months left so just pay the £360 a month and hand the keys back at the end, or get someone to buy it, although that will probably cost you £3000.
 


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