car finance early repayment question?

gotmaintvtr

I have finance on my car which i wish i never took out. but i have it now. ive set up a standing order to pay 250pounds a month extra off of the finance thats ontop of the 139pound a month that i set it up to be (i didnt earn the money i do now at the time) over 36months ive been paying it for 10months before i set up the S/O.

I looked at the paperwork and if i pay it early there figure is obvioulsy more than than the value i took out (interest) how do they calculate this as paying 250pounds a month on top is almost tripleing the standard payment.

thanks

PNPSUKNET

they will calculate it using the oft calculator for settling early, you do need to know that they may charge an early settlement penalty though

gotmaintvtr

ok then thanks. tbh i just want to clear it dont want debt hanging over my head anymore

CLAPTON

what sort of finance is it ?.. HP, personal loan etc?

what exactly does the agreement say about early repyament?

bclark

Your agreement should set out what will happen if you want to settle iot early and even include examples of what you wouyld pay at 3/4, 1/2 and 1/4 of the way through the term.

I have settled Car finance early twice and its been fine but obviously large chuncks of your payments have been used to clear the interest rather than the balance.

standupguy

Over paying is very credible but it has no effect on the interest you pay.

All you are doing by overpaying is putting your account into credit - you do not have any benefit - the Finance company does.

It would be better to put the £250pm into the best rate savings you can to earn extra interest and then when you have sufficient funds built up to settle the car account early - that is the only time when a rebate of interest charges will be applied and you will benefit.

gotmaintvtr

standupguy wrote: »

Over paying is very credible but it has no effect on the interest you pay.

All you are doing by overpaying is putting your account into credit - you do not have any benefit - the Finance company does.

It would be better to put the £250pm into the best rate savings you can to earn extra interest and then when you have sufficient funds built up to settle the car account early - that is the only time when a rebate of interest charges will be applied and you will benefit.

thanks for the help. wouldnt this still do the same thing realy as having it paid off early still result in ERC. but obviously i would make a couple of pound in interest?

CLAPTON

standupguy wrote: »

Over paying is very credible but it has no effect on the interest you pay.

All you are doing by overpaying is putting your account into credit - you do not have any benefit - the Finance company does.

It would be better to put the £250pm into the best rate savings you can to earn extra interest and then when you have sufficient funds built up to settle the car account early - that is the only time when a rebate of interest charges will be applied and you will benefit.

how can you say this without knowing the T&Cs of the loan?

standupguy

CLAPTON wrote: »

how can you say this without knowing the T&Cs of the loan?

The op says "car finance" - looks likely to be either HP or fixed sum loan agreement.

Unless the agreement is variable rate, paying extra will not reduce interest due.

Just giving opinion on most likely scenario and type of document

gotmaintvtr

hi sorry its HP.