Swap car HP for Personal Loan

bobobrussel

Hi,

I've just bought a brand new car on HP from a main dealer and only made a couple of payments but would now like to acquire a personal loan to pay off the car finance as a personal loan is much lower interest and hence the payments will be lower.

My questions is this... If I contact the finance company for a figure to pay off the HP, am I right in saying that they cannot include the interest, only the remaining car value? The car value is £9000 if this makes any difference.

Also, the actual contract had a final fee to exit the agreement, had I paid in the normal way. Would this still apply? Even if I had to pay the final fee, it would still be more cost effective over the long term.

jonesMUFCforever

They can offer you a repayment figure based on the contract you both signed.
I would be amazed if you did not have to pay some interest on the amount borrowed.


Get the settlement figure from the HP company in writing then apply for a loan to see how you get on.

bobobrussel

Thanks for the prompt response. The reason I asked was because I read this on the Money Advice website and wanted a sand opinion.

Your right to repay early
The amount that the lender can charge you for repaying an HP or conditional sale agreement early is capped by law and they might not be allowed to charge you at all if you have repaid all of the original amount you borrowed (the capital).

The most you can be expected to pay is the debt outstanding (ie what's left to repay, but not the interest) plus the lower of either:

1% of the amount repaid early – so £100 if you have an outstanding debt of £10,000
0.5% of the amount repaid early if there are less than 12 months remaining – for example, £50 if you have a debt of £10,000
the remaining interest in the unlikely event this is even less
it's worth knowing that if you repay less than £8,000, you shouldn't be charged any extra fees

jonesMUFCforever

You have hindsight of having the HP contract in front of you - we do not on here.