Question for Finance Bod ..
20 August 2001, 01:37 PM
#1
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Hello,
Wonder if anybody can help .. I have my present car on finance and still have 36 payments left
I borrowed 7100 at something like 12.2 APR i.e. I have left 36x184 = 6624.
Ideally I'd like to pay this off over 2 years instead (I do not have a lump sum to stick in) .. is it possible to re-jig the finance and change how much I pay a month i.e 6624/24 = 276 a month.
Or would paying it off over 2 years reduce the amount of interest I would be paying so I would not pay the total of 6624?
Would I be better saving say 100 quid a month for the next 12 and putting this in as a lump sum?
Anybody got any advice .. nice and easy explanations please
Much appreciated.
Doofus.
Wonder if anybody can help .. I have my present car on finance and still have 36 payments left
I borrowed 7100 at something like 12.2 APR i.e. I have left 36x184 = 6624.
Ideally I'd like to pay this off over 2 years instead (I do not have a lump sum to stick in) .. is it possible to re-jig the finance and change how much I pay a month i.e 6624/24 = 276 a month.
Or would paying it off over 2 years reduce the amount of interest I would be paying so I would not pay the total of 6624?
Would I be better saving say 100 quid a month for the next 12 and putting this in as a lump sum?
Anybody got any advice .. nice and easy explanations please
Much appreciated.
Doofus.
20 August 2001, 02:19 PM
#2
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The best thing is to speak to the finance company as there may be penalties for early payment. If there are ask how much and how they are calculated as it may still be worth repaying early.
Basic principle is repay as much as possible as soon as possible to reduce interest payments. It may be worth looking at other finance providers eg credit card companies that offer 0% for 6 months if you can trust yourself to pay of the loan (or part of it that you have put on the card). Equally a very cheap way to do it is to add it to a morgage (if you have one) but again you have to be disciplined enough to pay it back in the same or less time by making overpayments each month - otherwise you could still be paying for in in 20 years time!
Basic principle is repay as much as possible as soon as possible to reduce interest payments. It may be worth looking at other finance providers eg credit card companies that offer 0% for 6 months if you can trust yourself to pay of the loan (or part of it that you have put on the card). Equally a very cheap way to do it is to add it to a morgage (if you have one) but again you have to be disciplined enough to pay it back in the same or less time by making overpayments each month - otherwise you could still be paying for in in 20 years time!
20 August 2001, 03:24 PM
#3
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Cheers blubell,
I'm going to phone the finance company later .. I had thought of the early repayment penalty though ..
Not sure if I trust myself repaying the lot on credit card or any means where they don't take the money out of my account (whether I like it or not
) every month.
Thought somebody might have done a similar thing with repayments (as in overpayments) and could tell me what the outcome was ..
I'd like to think I could change the repayments to pay it off earlier within the existing finance agreement so to speak ..
If anybody knows for defo that would be cool.
Doofus
I'm going to phone the finance company later .. I had thought of the early repayment penalty though ..
Not sure if I trust myself repaying the lot on credit card or any means where they don't take the money out of my account (whether I like it or not
) every month.Thought somebody might have done a similar thing with repayments (as in overpayments) and could tell me what the outcome was ..
I'd like to think I could change the repayments to pay it off earlier within the existing finance agreement so to speak ..
If anybody knows for defo that would be cool.
Doofus
20 August 2001, 03:40 PM
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I have tried it and it really works (paid off loads of loans early including 20yr morgage in 7 yrs) all by making over payment. However it does take enormous self control. I just set up standing order for repayment plus £*** extra per month. Some lenders insist on a seperate standing order.
21 August 2001, 01:46 AM
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Unlike a mortgage, these fixed interest, fixed term loans are usually very inflexible.
When calculating a settlement figure, the interest is 'loaded' towards the start of the loan and there can be penalties meaning that there is not usually a great saving to be made by refinancing.
However, 12.2% is on the high side. Taking out another loan at 9.9% or even 8.9% to settle the first loan might save you a few pounds.
Barclaycard were doing a special balance transfer at 5.9% until paid off (i.e. almost forever). Not sure if they still are though.
Or you can get a load of credit cards and juggle the balances using the interest-free periods. £15k interest-free for as long as you like no problem
And on my MBNA credit card, they keep extending my special rate - I've been on 3.9% apr for years! Very useful way of borrowing cheaply.
Kevin.
When calculating a settlement figure, the interest is 'loaded' towards the start of the loan and there can be penalties meaning that there is not usually a great saving to be made by refinancing.
However, 12.2% is on the high side. Taking out another loan at 9.9% or even 8.9% to settle the first loan might save you a few pounds.
Barclaycard were doing a special balance transfer at 5.9% until paid off (i.e. almost forever). Not sure if they still are though.
Or you can get a load of credit cards and juggle the balances using the interest-free periods. £15k interest-free for as long as you like no problem
And on my MBNA credit card, they keep extending my special rate - I've been on 3.9% apr for years! Very useful way of borrowing cheaply.
Kevin.
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