BlackHorse HP car finance - settling early?

DON_41D

Hi All,

I just recently purchased a used car from a dealer and financed it through BlackHorse on an HP agreement. The date of purchase was the 13th of August 2010. The total purchase price of the car was £7000. The agreement was for 36 months, and the APR was 19.5%. My repayments are set at £250.83, and the total amount payable on the agreement is just over £9000 including the interest.

I have since realised that the finance agreement i have is fairly expensive in comparison to a personal loan. I therefore decided last week to apply for a £7000 loan over 36 months in order to settle the finance agreement. I was accepted with Nationwide on a £7000 loan over 36 months at a much lower APR of 8.6%. This will reduce my monthly payment by £30, and the total payable on the loan is £7900 which will save me over £1100.

I contacted Blackhorse today for a settlement figure on my existing HP agreement. I have already paid over £750 to them over the last 3 months, so I was expecting the settlement figure to be £6250 plus a bit of interest. They returned a settlement figure of £6777.60, does this sound about right? I have no idea how to calculate how much the settlement figure should be, so I need some guidance before I accept this. I had hoped for it to be a little less, as I was going to use the remainder of the loan to pay off a small balance of £500 on a credit card.

Any help would be very gratefully received! :cool:

~Brock~

Sounds about right to me.

How much of your first payment was in the form of a fee? That amount would not come off the amount you were actually lent.

Then consider how much you would have had to pay in interest on a £7000 credit card balance at a similar rate for the last four months and there is not much in it.