Confused about my car loan

leimichellecat

2 years ago I took out a car loan with Blackhorse for £10,999 with no PPI or any other extras at 14.3% APR. It is a 60month loan at £257 per month

I now have 36months remaining and owe £9680.

I am looking to get a loan with a better rate, hoping for lower monthly repayments. However after looking on various websites with lower APR (A+L being 6.3%) its saying my repayments for a £9600 loan for 36months is just short of £300 pm (no PPI).

I'm not particularly savy with borrowing and rates, so there could be blatantly obvious reason for this but I don't have a clue!

Tixy

leimichellecat wrote: »

I now have 36months remaining and owe £9680.

Where has the figure of £9680 owing come from?
Have you kept up with all payments?

After 24 months of payments I'd expect you to have a balance of £7400 and therefore a settlement figure of about £7600.

leimichellecat

the interest on top of the loan brought the total to pay back to £15201. Never missed a payment. I rang Black Horse this morning and they told me the repayment is £9680.

Apples2

WIthout getting a maths head on it is normal for a longer term loan to attract lower repayments, but you repay more overall.

A lower term loan (only 3yrs as opposed to 5yrs) carries a higher Monthly repayment figure, but you repay less overall.

It's quite a big assumption you will attract the advertised rate if you already have a £10k loan outstanding, but it depends on your circumstances.

Tixy

leimichellecat wrote: »

the interest on top of the loan brought the total to pay back to £15201. Never missed a payment. I rang Black Horse this morning and they told me the repayment is £9680.

Your total payments left on this loan are 36*257 = 9252, and they say the balance is 9680. And all payments were on time? And there isn't a balloon payment at the end?
If thats the case it will cost you more to settle now than to carry on with payments - even if you could get a new loan at 0%.

Those figures don't look right, they must be charging you the whole interest on 5years even if you repay after 2.
The terms must be different from a personal loan where they cannot front load all the interest and the interest penalty for settling early is a max of 2 months interest.

So the reason your new loan 36 monthly figures look more than if you kept with this for 36 more months is if you move you'll effectively be paying '6.3%' interest on top of already having paid the full interest on the original loan.

leimichellecat

I think I get it. I'm guessing that I've paid all my interest already, so now I feel obliged to finish the loan with them. They are cheeky.

I have a very small balloon payment of an extra £150, so it all sort of adds up!

Thanks for clearing things up for me!

CLAPTON

makes no sense

ask them for a written early settlement figure