Opinion on re-finance/handback

[swansburns1]

Hi,

This is my first post here, so firstly hello to everyone, and thanks for the assistance I've gained from being a 'silent reader' of this forum.

My 59 SLK 2LOOK (Designo Mystic White) will be coming to the end of its Agility finance HP contract next year and I would be really interested to hear your opinion/experience of the process.

Firstly, I love the car but I have been strongly considering hand-back simply because this is now the only car in the household and is proving to be very impractical. On the other hand, the car is so beautiful and knowing this is a limited edition (especially in the mystic white), I love the fact that it is so unique and will hate to see it go.

The balloon payment is for approximately 50% of the total contract value (around £17k I believe), therefore this really isn't an option. What kind of re-finance arrangement do you think would be available? My initial guess is that it would be a similar monthly payment to what I am paying now (considering it is ~50%), which does make me consider what is the point in re-financing when I could get a brand new car for the same monthly price (although I guess after another 3 years I would actually own the car).

I was originally interested in swapping for a C-Class Coupe, and was told by MB that I could do this at any stage (i.e. Right now if I wanted, since I'm on Agility), and a new finance package could be put together. However, swapping to the C-coupe would cost pretty much the same monthly amount (potentially more), and if anything I would like to slightly lower my payments.

Do you think that because my vehicle is the rare mystic white that it will have an increased valuation? Or will it not really make much difference?

Finally, if I do try to do a hand-back, what problems am I likely to face? I have heard that MB are not very forgiving when it comes to small scratches, or curbed wheels. Which unfortunately my car has suffered thanks to the ability of the average british driver.

Any advice would be greatly appreciated.

Thank you.

Jamie.

 

[jberks]

Firstly the value. No, special models and colour will have minimal if any effect on value. It's worth the trade value. Thats all I'm afraid. Anything a dealer tells you that differs from this is a line and the obey to fund it is coming from elsewhere.
Your quandary around buying yours or a new one is understandable. I'd say the cheapest option is to buy your own but that only makes sense if the car is practical to your needs. If not, then it's a bit of a waste and you're probably better putting your money into a new one.
For returns - I'm not sure where you return the car to. If it's the dealer then I'd arrange to go in a week before and ask them to assess the car. Anything they pick up on will l be cheaper for you to sort. When you drop it off, insist that they view the car and sign it off so there are no nasty surprises.

 

[100%Bitch]

If you hand back your car you will find it more difficult to get finance on another. Lenders don't like people who hand things back and a record goes on your credit file. people say it doesn't make a difference, but it does.

 

[gizze]

If you hand back your car you will find it more difficult to get finance on another. Lenders don't like people who hand things back and a record goes on your credit file. people say it doesn't make a difference, but it does.

That is only if you throw the keys back at them, simply handing the car back to them at the end of the 'agreement' is what they expect.
You can settle the finance at any time, and this is what your dealer will do, simply buy the car off you for an agreed price, but be careful, they will offer to clear the finance, but make sure you push for the best trade in, you may have some equity.


So firstly, what is your car worth?
If it is worth less than your final payment walk away.

If it is worth more then you have a few options....

Sell it and pocket the difference.
Or buy it yourself, either with a straight loan or on finance with a balloon again, that way you could get your payments down.

You could go hire a C Coupe, you can hire an Edition 125 for a lot less then you can buy one.



Looking on autotrader that model is available from £18k with an indy to around £23k at Mercedes, so I would expect a trade in of around £18k from Mercedes but push for £19k if buying something else.

 

[Kingy68]

Speak to your dealer and find out what your current vehicle is worth against it's GFV. Tell them what car you are interested in and the kind of payments you want and see what deal they can offer. They will want you to take another deal out so will try and make it worthwhile if they can.
If you have equity then you could look at part exing against a coupe and reducing payments with a fresh deal.
If you don't have equity or it's break even I'd personally just hand it back as some of the current lease deals through brokers are far better (cheaper) than Dealer PCP's and as you say - why re-finance with new car payments on what is now an older car. You still deal with Mercedes (contract and car) but the franchised dealers cannot come near some of the prices on offer.

Finally, if I do try to do a hand-back, what problems am I likely to face? I have heard that MB are not very forgiving when it comes to small scratches, or curbed wheels. Which unfortunately my car has suffered thanks to the ability of the average british driver.

Have a look at this. If there are any dints or scratches that fall outside the criteria it might be worth getting a local quote to sort them beforehand. That's on the assumption you are handing the car back. If you part ex with the dealer for another car they will ignore mileage and condition according to Merc and BMW dealers I spoke to last month.
http://www2.mercedes-benz.co.uk/con...rvices/existing_customers/vehicle_return.html

 

[gizze]

That is if you throw the keys back at them on the day you return it, however you are better to start negotiating now, that way they will give you a price for it that you agree on.
As said, get a settlement figure and take it from there.

 

[swansburns1]

Thank you all for your advice, most of it was extremely helpful. I think I will visit the dealership to see what they have to offer, and now I understand a bit more about the process I will know what I could possibly use to negotiate the best deal on a new car.

I also didn't even consider re-financing with another balloon payment, for some reason I was just thinking it would be a straight finance arrangement for the remaining amount.

One more question; when I called this summer to enquire about the C-class Coupe, the salesman did say that I would get a better price because it was the summer (with my car being a coupe cabriolet). Do you think this had any merit? Surely if I did the deal next month (for example) my car should be worth more than come April 2012? Or would they offer me less because it is likely to sit on the forecourt for longer?

Thanks

 

[MBDevotee]

Why in gods name would you buy a NEW car - what's wrong with a 6 month old one.

Save about 25% of the cost and I'm pretty sure your monthly payment would drop....

 

[gizze]

I also didn't even consider re-financing with another balloon payment, for some reason I was just thinking it would be a straight finance arrangement for the remaining amount.

You won't be able to do this with Mercedes, however Alphera (BMW Finance) will do it for you, as will Lombard and a few others.
Most will want the balloon to come to an end when the car is 8 years old.

However, if you owe around £16,000 you may be better to do it as a straight repayment but over 60 months, you could get 6% apr doing that so it would be £308.
You can still settle after 24 or 36 months.

If you did it over 48 months they would allow a 40% balloon, so around £6500 at the end, this would come in at around £255 a month.

I think that I would rather just pay £50 more for another 12 months and own it.
At least you don't have to find £6000 as a lump in 4 years time if you do want to keep it.

Plus you don't know what situation the world may be in, getting finance again in 4 years might not be that easy.

 

[gizze]

Why in gods name would you buy a NEW car - what's wrong with a 6 month old one.

Save about 25% of the cost and I'm pretty sure your monthly payment would drop....

I agree, however, hiring them can be worth while.

But yeah, you can save up to 40% going for a year old car. But depends on the model of course.

 

[Kingy68]

Why in gods name would you buy a NEW car - what's wrong with a 6 month old one.

Because some of the current lease deals (especially Mercedes through brokers) are incredibly cheap - working out less than the depreciation of the car over 3 years but giving you a new car with warranty/ tax and recovery. Deposit is minimal (2 or 3 months lease) and ongoing monthly cost then whatever you have agreed.
Finance (balloon/ PCP) a 6 month old car and you will pay more (as you will have apr% and big deposit) then have the decision of re-finance or trade in at 3 years which could be compounded by market value v GFV.

Depends what you want - If you want to 'own' a car outright or not. I have always preferred to buy my cars and so have historically bought ex dems or upto 18 months old. I'd always assumed lease deals were expensive, but at present that's not the case.

 

[dedicatedtoMB]

Advice re: Handback

Hi and welcome.
Firstly lets get one thing straight. you have a regulated finance agreement (assuming it is in your name and not a ltd company) and so handing back at any time after you have paid 50% of the balance funded comes under your termination rights, so it will not go against you. That said future lending may be hindered by lenders having tightened their criteria.
As for the value, everybody says options dont add value. this is true to a point but what is most important is the overall package. for example you could have the highest spec car on the planet but chose the wrong interior or gearbox and the value will suffer. Your SLK sounds interesting and given that new car sales in late 2008 early 2009 took a kicking, 3 year old stock is not easy to come by. Suggest you get tomorrows Sunday Times and phone some of the MB Buyers for a price. It is thier job to find intersting cars and keep thier retailers forecourts stocked so dont be shy of asking. Once you have a price you have the ammunition to ask for the deal you want. Good luck and remember they want your business!

 

[gizze]

I'm amazed at how many people think they have to hand the car back at the end of the agreement or pay the balloon, as if it is an 'either or' situation and don't realise that they can do what they want with it as long as the lender is settled.

Make a few calls and save yourself some money.

 

[MBDevotee]

I think you hit one nail on the head there though with

"Because some of the current lease deals (especially Mercedes through brokers) are incredibly cheap - working out less than the depreciation of the car over 3 years but giving you a new car with warranty/ tax and recovery."....

The depreciation on a new Mercedes is horrific. On ANY newish car it's vastly more than any other cost. I once sold a brand new car to a guy who's sole reason for changing was that his 3 year old car was £210 to tax, whereas the new one only cost £90 to tax. Given he did less than 5000 miles a year and paid out £15,000 to change for an almost identical car, I was really struggling to see his logic... It would have taken him 125 years to get back what he spent in the car purchase in road tax spending, and he wasn't that young!

I don't CARE what Merc tell you, Glasse's guide prices are based on a "nice" spec car - on a merc that means you HAVE to have alloys (if not standard) Metallic, Leather if it's an E class or above and so on....otherwise at resale time there will be much sucking of teeth...

So when someone says "oh Mercedes have good residuals, look at the list price and the resale price" don't forget that if you pay list (i.e. no extras) you won't get beans secondhand.....

Now, if you buy a two year old one, and save 40% and then sell again at 5 years, the depreciation will (relatively speaking) be minimal...

Again, unless you are a business making lots of profit and just want to be able to write a load of it off against tax, never ever buy a new car...

 

[andy-integrale]

I think you hit one nail on the head there though with

"Because some of the current lease deals (especially Mercedes through brokers) are incredibly cheap - working out less than the depreciation of the car over 3 years but giving you a new car with warranty/ tax and recovery."....

The depreciation on a new Mercedes is horrific. On ANY newish car it's vastly more than any other cost. I once sold a brand new car to a guy who's sole reason for changing was that his 3 year old car was £210 to tax, whereas the new one only cost £90 to tax. Given he did less than 5000 miles a year and paid out £15,000 to change for an almost identical car, I was really struggling to see his logic... It would have taken him 125 years to get back what he spent in the car purchase in road tax spending, and he wasn't that young!

I don't CARE what Merc tell you, Glasse's guide prices are based on a "nice" spec car - on a merc that means you HAVE to have alloys (if not standard) Metallic, Leather if it's an E class or above and so on....otherwise at resale time there will be much sucking of teeth...

So when someone says "oh Mercedes have good residuals, look at the list price and the resale price" don't forget that if you pay list (i.e. no extras) you won't get beans secondhand.....

Now, if you buy a two year old one, and save 40% and then sell again at 5 years, the depreciation will (relatively speaking) be minimal...

Again, unless you are a business making lots of profit and just want to be able to write a load of it off against tax, never ever buy a new car...

I would never buy brand new for cash but as you rightly say the biggest cost to buying an even relatively new car is depreciation. My aim is to understand up front what depreciation is likely to be over the term and ensure I cover or preferably fix that whilst minimising other running costs. The best way for me to guard against depreciation is to have a company car... but that's not necessarily the cheapest way overall to run the car I want.

The last two occasions I have opted to take a car allowance rather than a company car It is has been cheaper, easier and less risky overall, in terms of exposure to depreciation/large bills, to go new instead of 6, 12 or even 18 months old. As has been pointed out there are some cracking deals on new MB cars that do make absolute sense when you weigh up all the numbers and you get rid of the disposal hassle at the end into the bargain. I do this fully expecting there to be no value in the car at the end of the term at which point I hand back.

That said it's probably not as sensible as going and buying an relatively new Mondeo/insignia from a car supermarket and running it until it turns to dust but I don't want to do that so am happy to suffer the additional cost.