Answer
Jul 05, 2019 - 01:09 AM
Hi there
Looking at your instalment amount and the car's model year, the chances are that you financed it by way of a balloon payment (residual value) deal over a long repayment period. This would mean that you're essentially still paying off the interest on the original finance agreement after such a short time, and have yet to start repaying the capital outlay (the car's price when you bought it). In this case, you most likely still owe more on the car than it's actually worth, so if you were to sell it now, you'll end up making a loss on the deal.
You won't be paying any penalty per sé, but the added financial burden sure will feel like it. When faced with such a finance deal, it's best to keep paying the instalments at least until the outstanding balance is lower than the car is worth. If you do this, the outstanding balance on the car's finance agreement can be settled with the financial service provider, and you'll have a little bit left over to put down as deposit on your next purchase.
Hope this helps!
The AskAutoTrader Team
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