Settling Car Finance (HP) early...

bellc77

Hi
I am 20 months through a HP agreement for a car that originally cost £9850 with a down payment of £2900. The payments broke down in 1st payment of £388.17 with 34 payments of £223.17 and a final payment of £378.17. I want to settle the HP early and was today quoted a settlement figure of £3488.46. I think this seems a little expensive as I thought more of the capital was paid off by this point with a small charge for outstanding interest?
Does this sound accurate??
Any advice gratefully received!
Thanks

jd87

You might need to look at the terms and conditions, but I suspect that the full interest amount it added onto the loan from the start so paying off early doesn't save you anything. That's just how these things work sometimes.

CLAPTON

it looks like you are paying about 10% APR

if so that's about right

the interest is obviously more in the early days of the loan because you owe more so the capital.

so the early months you are paying around 50-60 in interest ; this decreases so by 20 month you're paying around 30 per month

bellc77

Thanks guys for the responses. It makes sense but I was hoping that early payment may prove more of a benefit. Ah well, I'll just have to console myself with the good it'll do my credit rating!