ADP

Hi all


I have a loan which Ive had some time, infact I took it out to buy the scoob and when I bought my next car I hung onto it for a few months(job was on the rocks) anyway I now want to pay it off - i have another for the new car.

So currently the balance is like 7000 ish, and I think it was a 12000 loan when I got it. If I want to pay it off now will I have to pay 7000 or will it actually be less???

The reason I say this is that generally on loan statements Ive had before(dont get one regularly with this one) it normally says for say a 250 a month payment the loan only goes down by 200 as the other 50 is interest. So effectively if I pay off now I dont have X number of 50 quid interest payments to make?????



thanks


Andy

Neanderthal

iTrader: (6)

It'll be less than 7000 cause you won't be paying the interest on what you're paying back

HankScorpio

It should be less, there are governemnt rules for it.
Sounds like you were lucky and got one that didn't load the interest at the start.

Chip

You could always try this

http://news.bbc.co.uk/1/hi/business/3050417.stm

Chip

ADP

hmm just called them, and it appears to be exactly what it says on the screen (this is with egg).............hmm ok then..........ah actually if I pay the 7000 off now ofcourse Im saving a fortune, because if Id paid it by the month Id have all the months interest so it would have been more like 8000 or so

Matt Churchill

The settlement figure depends on the way that the company (in this case Egg) deal with interest.

I am pretty sure that it depends on whether interest is charged at a "flat rate" or "compound rate". For example a flat rate loan, would say you are borrowing x, and we charge a rate of y%, therefore the interest is z, and the interest is added at the start of the loan. Hence, if you got a statement, you would see the first entry on the loan account being the interest for the full term of the loan. Under the Consumer Credit Act, if you were to pay the loan off early, you would get a refund of some of the interest, therefore the loan balance and redemption figure would be different amounts.

If a loan uses compounded interest, interest is calculated daily, and applied to the loan on a regular basis - usually monthly for loans of upto £25k. Therefore, you may actually find that the redemption figure is higher than the loan balance, as interest will have accrued since the last time any interest was applied to the loan.

Hope that makes some sense.

Butty

iTrader: (2)

If you look (very hard) on HP and conditional sales agreements, it states that you can ask for voluntary termination if you have paid 50% of the total sum (deposit+ amount borrowed + interest).
If this is the case then just ring them up, say you want vol. termination and they'll send some heavies around to pick it up within 21 days.
There is no penalty in terms bad credit scoring or fee for closure, but the car must be in good condition and have no arrears.
The Citizens Advice Bureaux can offer further info on HP or conditional hire agreements.

Given the details that you have supplied, as long as its an HP or conditional sales agreemement, it looks likely you have paid the 50% so you can just give the car back and walk away.

Nick

imlach

Sounds like it is with Egg though, and if so, it is more than likely a personal loan, and NOT secured on anything - in which case, the above does not apply.