I have a Porsche Cayenne and took out a loan from the dealer over two years ago. The car is currently valued at c.28k and I have an outstanding loan of 35k.
My personal circumstances mean that I am financially tight nowadays. I do a lot of driving (40,000 p/ years) with work and get the usual car allowance and mileage.
One scenario is I sell the Cayenne and take the hit with the existing loan. Then, spend another 25k on say a BMW diesel. Total cost around 37k + loan charges. Making the monthly payments would be near impossible.
Alternatively I keep the car and re-finance it with a cheaper loan. I barely have the means to keep it on te road and servicing costs are near impossible to maintain.
Do I remain in debt, accept the debt or get out of debt and get into more debt ?
Joe Smith, London, UK
Hi Joe,
Downsizing is never nice and I respect anyone who bites the bullet rather than limping on.
Looking at the age and value you are putting on the car, I guess this is the 3.2 V6 Tiptronic. I would expect a dealer to offer you £28,000 but would think you could sell it for £30,000 privately.
So that cuts the debt to £5,000. Perhaps you can downsize two levels to a nearly-new diesel BMW 3-Series, taking a loan to cover the car and the £5,000.
If you are getting the correct allowances of 40p per mile for the first 10,000 miles and 25p for the next 30,000 miles from your employer, once running a smaller car, you should make a little money by running 3-Series. So that will help with the loan.
This, of course, is all easier said than done. I hope your Phoenix rises soon.