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  • FIRST POST
    • Face
    • By Face 2nd Oct 17, 9:38 PM
    • 22Posts
    • 5Thanks
    Face
    Settling a PCP loan tomorrow - best way to pay it off?
    • #1
    • 2nd Oct 17, 9:38 PM
    Settling a PCP loan tomorrow - best way to pay it off? 2nd Oct 17 at 9:38 PM
    Hi,

    Like quite a few on here I have recently purchased a new car and took out the finance purely for the £1500 deposit contribution - I have the cash ready to pay it off.

    Now, how am I best to settle the remainder circa £9600 to get charged the lest amount of interest?

    1) Just get a full settlement figure and pay it off there and then with a debit card, or

    2) Pay of the vast majority - say £9500 and then get a settlement figure for the remainder

    Basically, what I'm asking is - Is the interest penalty charge only made on the outstanding amount when I settle? And therefore paying a massive percentage lumpsum first would reduce the remainder to settle and hence a much smaller interest amount to pay when I then settle.

    I hope that I have explained what I mean clearly - it makes perfect sense in my own head :-)

    Thanks in advance,

    Face
Page 1
    • StopIt
    • By StopIt 3rd Oct 17, 8:32 AM
    • 1,449 Posts
    • 1,239 Thanks
    StopIt
    • #2
    • 3rd Oct 17, 8:32 AM
    • #2
    • 3rd Oct 17, 8:32 AM
    Just get the settlement figure I think, and then work from there?


    What is the early settlement penalty charge, you haven't specified. is there one at all?
    • Herzlos
    • By Herzlos 3rd Oct 17, 11:39 AM
    • 6,087 Posts
    • 5,519 Thanks
    Herzlos
    • #3
    • 3rd Oct 17, 11:39 AM
    • #3
    • 3rd Oct 17, 11:39 AM
    It depends on the contract - it may be a percentage of the total amount or the interest on the outstanding.
    I take it you're out of the 14 day cooling off period?
    • Daveahare99
    • By Daveahare99 3rd Oct 17, 2:15 PM
    • 49 Posts
    • 20 Thanks
    Daveahare99
    • #4
    • 3rd Oct 17, 2:15 PM
    • #4
    • 3rd Oct 17, 2:15 PM
    Just settle it I would say.

    When I did mine ( 15k approx ) BMW said the interest fee that's applied on settlement can't be more than 60 days worth of interest.

    So not much.
    • Nearlyold
    • By Nearlyold 3rd Oct 17, 3:56 PM
    • 984 Posts
    • 817 Thanks
    Nearlyold
    • #5
    • 3rd Oct 17, 3:56 PM
    • #5
    • 3rd Oct 17, 3:56 PM
    Hi,

    Like quite a few on here I have recently purchased a new car and took out the finance purely for the £1500 deposit contribution - I have the cash ready to pay it off.

    Now, how am I best to settle the remainder circa £9600 to get charged the lest amount of interest?

    1) Just get a full settlement figure and pay it off there and then with a debit card, or

    2) Pay of the vast majority - say £9500 and then get a settlement figure for the remainder

    Basically, what I'm asking is - Is the interest penalty charge only made on the outstanding amount when I settle? And therefore paying a massive percentage lumpsum first would reduce the remainder to settle and hence a much smaller interest amount to pay when I then settle.

    I hope that I have explained what I mean clearly - it makes perfect sense in my own head :-)

    Thanks in advance,

    Face
    Originally posted by Face
    It depends on the terms and conditions of your loan

    Some lenders charge no full or partial settlement fee.
    Some lenders charge only a full settlement fee (in which case your suggested method of paying a partial settlement first would save you some interest.)
    Some lenders charge a fee on partial and early settlement in which case there are no savings to be had but see below.

    All of the above are allowed under the Early Settlement Regulations 2004 (as amended to comply with the European Consumer Credit Directive.

    Strictly its not actually a fee, its a reduction in the rebate of interest you receive for early settlement. Lenders are permitted under the regulations to calculate the rebate of interest from a date up to 58 days after the early settlement request is made - you then have up to 58 days to settle, you can wait until the last moment to settle if you want, so you only pay interest for the time the loan is outstanding, however this doesn't really save you any money as you will still have paid the interest because you will have kept the loan going for longer.
    • Face
    • By Face 4th Oct 17, 8:50 PM
    • 22 Posts
    • 5 Thanks
    Face
    • #6
    • 4th Oct 17, 8:50 PM
    • #6
    • 4th Oct 17, 8:50 PM
    Hi everyone,

    Thanks for the replies.

    I spoke with the finance company and they advised the most economical way would be just to settle the full amount which I did there and then. The "extra" that I had to pay in interest/charges was so small that even if there was a cheaper way it couldn't have really been much less anyways.

    Many thanks again,

    Face
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