Paying car finance off early

characature

About 10 months ago I took out car finance through Carcraft on a second hand car. The loan is over 5 years. I wish I had taken out an unsecured loan instead, I had planned to, but I got the hard sell and unfortunately was talked into it. The guy that sold it to me told me it was a better option if I planned to pay it off early, as I would be paying off the capital steadily, rather than only a little at the beginning.

The loan agreement shows the total to be paid over 5 years including all interest over 5 years. If i were to pay off the loan now, would I have to pay that full amount, ie the full 5 years worth of interest? Or judt the interest accrued up til now? If the former is true, then the guy who sold it to me actively lied to me. But I'd never be able to prove it.

Thanks in advance for any help.

immoral_angeluk

Depends if the interest is front loaded or whether it is continually accruing. Give the company and call and get a retrospective settlement figure.

CLAPTON

what sort of loan is it: HP or what

what does it say about early settlement

contact the company and ask for settlement figure

characature

Thanks, will contact the company.

In the smallprint it says that if I repay early I have to pay the following for every £1000 borrowed

Quarter of term has passed: £811.73
Half of term passed: £576.69
Three quarters of term passed: £307.69

But I can't figure out of that's the amount of credit alone, or including the interest calculated over 5 years.

Will contact the company. Am just annoyed with myself that I allowed myself to be talked into taking out finance through them when there were better options, I should have done more research at the time. My fault I guess.

immoral_angeluk

That sounds like the interest. Sounds front loaded too.

CLAPTON

The figures you have quoted seem fair and you are NOT being charged all the interest but the settlement figures are in accordance with the CCA rules.

The loan agreement always shows the full cost of the loan over the full period... it is a CCA requirement to show that but that doesn't mean you pay it if you terminate early. (very confusing in my opinion but the lender has no choice but to show it).

In any event this looks like a personal loan at around about 10-12% APR.

characature

APR is 13%

So you think those figures sound like they are based on what I borrowed not on the full amount? That makes me feel a bit better.

Am considering getting an unsecured load at a better rate and using that to pay off the flat rate loan.

Thanks again for the help, much appreciated.

CLAPTON

It's not a flat rate loan (whatever that means ); it's a standard loan at (you say) 13% APR and the settlement figure are in accordance with the CCA rules.

It only makes sense to refinance if you can get a loan a lower APR.

characature

I thought it was flat rate, as it was sold to me as a flat rate of 6% and it also says that in the paperwork

CLAPTON

characature wrote: »

I thought it was flat rate, as it was sold to me as a flat rate of 6% and it also says that in the paperwork

flat rate doesn't describe a loan

its a marketing device used by car salesman to avoid saying 13% APR. (basically a way of lying)

characature

OK, thanks for that. Was clearly trapped by that device! Will know better in the future.