Car Loan Repayment

Leebobs

Evening All,

I took out a loan through BMW financial services to buy my car at 8.9%

I received my first statement the other month and owed £100-200 more than I had paid for the car (after my deposit of £3k was deducted)?!??!

It seems like they add on all the interest payable over the term at the beginning so in the first year all you do is pay off the interest for the finance product with the next two years paying back the balance... before the £9k payment at the end.

If I was to try and pay off the balance early (IE by using a 4.6% loan)... would the interest for the remaining 18+ months be refunded?

Or would I be liable to pay that off anyway??

Cheers

Leebobs

DCFC79

What does your copy of the T&C's say about it.

lee111s

It'll be front loaded interest. You need to ask the finance company about early repayment and refund of saved interest.

thebritishbloke

If the T&C's say it's regulated under the consumer credit act, then yes you'll get the interest back when you pay it off.

ViolaLass

lee111s wrote: »

It'll be front loaded interest. You need to ask the finance company about early repayment and refund of saved interest.

The statement probably shows the total that the OP will to pay if they keep making payments as planned.

The interest isn't front loaded - when you owe more, you pay more interest, that's all.

OP, check your agreement for early repayment fees.

Leebobs

Thanks ViolaLass,

I called for a settlement quote and you're right, the amount was indicative and the settlement quote excludes interest for the rest of the term.

So that's a 8.9% APR deal refinanced by a 3.9% personal loan. All terms agreed, just waiting for the funds to clear.

Leebobs

bsms1147

Why did you take out the car finance in the first instance, rather than go straight for a (lower APR) loan?

Pixie5740

I take the personal loan not only clears the BMW Finance but also includes the £9k balloon payment at the end. Does that actually work out cheaper? Yes you're paying a lower APR but you're paying it on a larger principal.