In a position to pay off car balloon payment loan

Katem

Hello there

I'm in a position to pay off my car loan (around £12k I think, but will need to call for a settlement figure).

Someone told me that it would be best, in terms of paying less interest, to pay off the majority of the loan less a couple of hundred, THEN ask for a settlement figure. That way I'd pay less interest. Is this correct?

Also if the money is in my husband's name, can he pay the loan off for me with his card/cheque, or does he need to transfer the money to my account for me to do it?

Any advice?

thanks

SeanG79

Read the T&C's of your contract, but normally with car finance, you are still charged the 59 days interest on overpayments, just as you would be for settling early.

Katem

Thanks SeanG79.

So there would be no difference either way? I might as well get rid of the loan altogether.

What about transferring the money from my husband, or can he pay it with his card/cheque?

SeanG79

They will normally accept a debit card payment but not a credit card payment. You can pay by cheque too. Normally when you call the finance company, they will provide you with a settlement figure (make sure it is a settlement figure and not a balance outstanding), they figure will be valid until a certain date.

As in my previous post, read the T&C's of your agreement to see how overpayments are treated.

nelly12

SeanG79 wrote: »

Read the T&C's of your contract, but normally with car finance, you are still charged the 59 days interest on overpayments, just as you would be for settling early.

Not correct, partial or full early settlement does not incur an interest penalty under European Consumer Credit Directive rules.

nelly12

Katem wrote: »

Thanks SeanG79.

So there would be no difference either way? I might as well get rid of the loan altogether.

What about transferring the money from my husband, or can he pay it with his card/cheque?

Bank transfers or cheque payments are normally free. Debit card transaction incur a fee, typically £8-£12. Credit cards can be used but fee is usually 3%.

Katem

Thanks

He will use his debit card to clear the balance, but if there's a fee, he'll send a cheque.

Collabora

The will send the settlement figure by post if you ask

SeanG79

nelly12 wrote: »

Not correct, partial or full early settlement does not incur an interest penalty under European Consumer Credit Directive rules.

It is not an interest penalty, but how the formula is worked, from the date you request to make the early settlement, the finance company calculates the settlement date as 28 days + 1 month from the date of notification of early settlement, hence why you pay 58/59 days interest.

I suggest you go read up on the Consumer Credit Directive, here is a link for guidance https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/34687/12-1264-consumer-credit-directive-guidance.pdf

Bank transfers or cheque payments are normally free. Debit card transaction incur a fee, typically £8-£12. Credit cards can be used but fee is usually 3%.

With the multiple car finance providers I work with, those that will accept credit card payments charge 1.5% but debit card payments are free as are bank transfers and cheque payments.

Katem

I'll check about the debit card, as it would be far more convenient to pay like that!

nelly12

SeanG79 wrote: »

It is not an interest penalty, but how the formula is worked, from the date you request to make the early settlement, the finance company calculates the settlement date as 28 days + 1 month from the date of notification of early settlement, hence why you pay 58/59 days interest.

I suggest you go read up on the Consumer Credit Directive, here is a link for guidance https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/34687/12-1264-consumer-credit-directive-guidance.pdf



With the multiple car finance providers I work with, those that will accept credit card payments charge 1.5% but debit card payments are free as are bank transfers and cheque payments.

You quoted overpayment which was where I corrected you.