Pay off car finance
In October last year, I changed cars. We got a £15,000 Ford Focus, with £6,000 paid upfront and £9,000 on finance. The APR is 5.8%, with a total to pay back of £10,345.80 over 60 months.
I have made 3 monthly payments of £172.43, and I now owe £9,829.51. The settlement figure is £8,698.56, a difference of £1,130.
What would be the easiest way to pay this off quicker and cheaper? I thought about a couple of 0% credit cards over 36 months, but I didn’t want over 8 grand on the plastic. I thought about a bank loan, but don’t want it secured against the house. I got a better price on the car by agreeing on their finance, and I got all the talk on how their loans are against the car, not your house. My family isn’t in a position to lend me the money. I could pay a bit more than the £172 a month I’m currently paying.
In hindsight, I shouldn’t of taken a car loan out over 5 years, but the intention was always to pay it off early. It’s just how?
Cheers in advance
I have made 3 monthly payments of £172.43, and I now owe £9,829.51. The settlement figure is £8,698.56, a difference of £1,130.
What would be the easiest way to pay this off quicker and cheaper? I thought about a couple of 0% credit cards over 36 months, but I didn’t want over 8 grand on the plastic. I thought about a bank loan, but don’t want it secured against the house. I got a better price on the car by agreeing on their finance, and I got all the talk on how their loans are against the car, not your house. My family isn’t in a position to lend me the money. I could pay a bit more than the £172 a month I’m currently paying.
In hindsight, I shouldn’t of taken a car loan out over 5 years, but the intention was always to pay it off early. It’s just how?
Cheers in advance
0
Comments
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Have you tried a unsecured loan?0
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How much can you realistically afford to pay each month?You should pay attention to the needs of the moment - otherwise there is no future. But to ignore the future is foolish - living solely for the moment leaves nothing for when the next moment arrives.0
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Bank loans aren't usually secured on the house.
Are you allowed to overpay on the car finance?0 -
Probably could afford another £50 a month or so, and I can overpay if I like. I was just trying to make the interest figure of £1,130 over the whole term smaller0
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Probably could afford another £50 a month or so, and I can overpay if I like. I was just trying to make the interest figure of £1,130 over the whole term smaller
Usually you can overpay on car finance. Finance flexibility is normally used within the sales pitch of the salesman for the car finance. Overpaying reduces the overall interest to be paid.
Ok so if you overpaid £50 and paid £222.43/month then you would approximately have paid back the loan in 43months instead of 57 months currently. I would ask for a settlement figure around month 38 in this case as you will be saving some interest on the overpayments.
Another option is if you paid the settlement figure with say a 0% purchase credit card(s) (if allowed to pay with this method) then £222.43/month could be directed to the credit card(s). If you managed to get 0% credit cards then the car will be paid off in 39months.
You could also find a money transfer card for 0% interest (fees apply though) and transfer the money to your bank and pay the finance that way instead.
There are things to be wary of:
The best 0% purchase credit cards are only for 31 months.
The money transfer card fees get higher as a result of the longer interest free period giving you less interest savings.
That would be a big credit limit required at a time when you have recently had a credit search for car finance.
When applying for credit in the future, a finance deal on a car is generally seen as a lower risk to the credit companies than a large balance on a credit card. This is because you are committed to a monthly payment on finance/loan where as you could chose not to pay more than the minimum on a credit card.
I hope this helps.You should pay attention to the needs of the moment - otherwise there is no future. But to ignore the future is foolish - living solely for the moment leaves nothing for when the next moment arrives.0 -
Thank you for your help, really good advice. Think I will go with the overpayment option, get it paid off earlier and save some interest.
Thanks again0
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