Car loan dilemma please help

afcafc · 27 July 2017 at 10:27PM

Ok guys,

So I currently have a car that I bought on a 5 year finance HP.
I currently pay £200 per month at a rate of 5.59% and have £8800 left to pay with an early settlement figure of 7490. I have 3years 8 months left on the agreement.

My main question is that I am looking at the best way of saving costs but not sure how to go about it.

I looked at a loan online with zoopa at 3% and I would end up saving £1000 in interest and reducing the term to 3 years and I would be paying £216 per month.

I have also looked into voluntary termination but would need tonmake another 14 payments before I could do this.

This is a our family car that my wife uses for short journeys to take out two little boys to school and for shopping etc. The car however needs to be an automatic( which increases the price) as she have come over from Canada and has an auto licence.

Any advice would be great. I don't have major disposable income.
Many thanks

[Deleted User] · 27 July 2017 at 11:20PM

Don't take any advertised rate as read (e.g 3%) you may not get this headline rate.

jonesMUFCforever · 27 July 2017 at 11:26PM

If you go down the VT route all your payments will have been for nothing - at least if you make all the repayments you will have something to show for it.

ViolaLass · 28 July 2017 at 1:23AM

Couldn't she take the test for a non-automatic?

afcafc · 28 July 2017 at 9:03AM

It would cost us way too much in lessons as she would be starting from scratch and enwouldn have anyone to look after the kids etc. We just don't have the money and time to do it unfortunately

afcafc · 28 July 2017 at 9:04AM

So would the best thing be to get a loan and pay the car off in full then I'm guessing?

Mogley · 28 July 2017 at 10:31AM

I had a car on finance for 5 years and earlier this year, with 40months remaining, I applied for a money transfer credit card from virgin (my situation is such that I am not applying for a large loan or re-mortgage soon). I was fortunate enough to get a credit limit to cover the settlement figure of £7150. The credit card had a fee 2.5%, 0% interest on money transfers for 32months. This potentially saves me £1350 in interest (as long as I stick to the plan). I can afford my monthly payment of £225 each month but only pay the minimum payment to the credit card. The difference between the minimum payment and £225 gets stashed in a regular e-saver at 2.25% (with virgin). Once the 0% period is finished, I will have enough to pay of the credit card plus gained some interest in the process.

Could this be an option for you?

afcafc · 28 July 2017 at 11:01AM

Thanks for the reply

I would not mind doing that but I already have a virgin cc, Tesco and Barclays which have 6k each on them. If I apply for a new credit card for a large balance and don't get the 7k I need, will they just issue me a card for a lower balance? Not sure if it will work for me.

Thanks for the idea hadn't thought of this but my term is longer as well

Mogley · 28 July 2017 at 11:34AM

Probably wont work for you. This was only my second credit card and my first was an MBNA purchase card applied for on the previous day. The only unsecured credit I had at the time was a 0% loan (£275) for furniture and the car finance mentioned.

Herzlos · 28 July 2017 at 11:35AM

The best option is a combination of:

Get a loan at better than 5.59% to settle the HP and/or
Trade that car in for a cheaper one, you'll likely lose some money from the trade in, but you could potentially knock your outstanding balance in half after the partial settlement.

afcafc · 28 July 2017 at 12:40PM

Hey so you are saying that I should get he loan. And then sell the car when the equity is right?

I get you are saying to take the loan but I don't get the second part when I should change the car?
Cheers for the advice

Just want to make sure I choose the right option

Car loan dilemma please help

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