Yes, you can get a new car even if you have outstanding finance on your current car, but it depends on your circumstances and the type of finance agreement you have. Here’s how you can approach it:
- Check Your Current Finance Agreement:
- Hire Purchase (HP): You’ll need to settle the outstanding finance before transferring ownership of the car. Most lenders provide a settlement figure upon request.
- Personal Contract Purchase (PCP): You can either pay the settlement figure, including any balloon payment, or trade the car in, provided its value covers the remaining finance.
- Trade-In Option:
- If the car’s current market value is higher than the outstanding finance, you can trade it in with the dealer. The trade-in value can cover the remaining balance, and any surplus can be used as a deposit for the new car.
- Negative Equity:
- If the car’s value is less than the remaining finance, you’re in negative equity. Some dealers or lenders may allow you to roll this amount into the new car finance, but this will increase your new monthly payments.
- Affordability:
- Lenders will assess your ability to afford two finance agreements if you plan to keep both cars. If affordability is a concern, you may need to settle the current agreement before obtaining a new one.
Steps to Take:
- Request a Settlement Figure: Contact your current lender to understand how much is left to pay.
- Get a Valuation: Have your car valued to determine if a trade-in is feasible.
- Discuss Options with the Dealer: They may help manage the settlement process as part of the new purchase.
- Check Your Credit Score: Ensure your creditworthiness for a new finance application.
Important Note: Make sure you understand the terms of your existing and new agreements to avoid overcommitting financially. If in doubt, consult the lender or dealer for tailored advice