Loan for car - HP vs loan plus will want to pay off early

GemmaC

Hi,

We need to borrow approx. £9500 either via HP or a loan. But later this year we will be able to pay the whole thing off. The figures are:

HP: 6.57% per annum / 12% APR
Sainsbury's loan: 3.6% per annum / 23.6% APR

(I should add I understand about the early settlement fee on the loan but my plan would be to make an overpayment so the settlement fee would be based on a tiny amount.)

I am thoroughly confused which is the better option. We intend to take either over 3yrs and the figures per month aren't much different. But with which option will we pay the least interest over the first 6-12 months?

Thank you!

forgotmyname

The least amount of interest is not the whole story though. Are there any early termination penalties?

CLAPTON

GemmaC wrote: »

Hi,

We need to borrow approx. £9500 either via HP or a loan. But later this year we will be able to pay the whole thing off. The figures are:

HP: 6.57% per annum / 12% APR
Sainsbury's loan: 3.6% per annum / 23.6% APR

I am thoroughly confused which is the better option. We intend to take either over 3yrs and the figures per month aren't much different. But with which option will we pay the least interest over the first 6-12 months?

Thank you!

the figures make no sense

can you quote the figures
amount borrowed
APR
monthly payment amount
number of payments
any additional fees or final payments

GemmaC

Thank you - was just editing post to say I don't think so with the HP but yes with the loan - but I'd plan to make a large overpayment and reduce the term or leave it so the fee would be based on a tiny amount left on the loan.

CLAPTON

GemmaC wrote: »

Thank you - was just editing post to say I don't think so with the HP but yes with the loan - but I'd plan to make a large overpayment and reduce the term or leave it so the fee would be based on a tiny amount left on the loan.

makes even less sense

provide the info requested

GemmaC

This reply wasn't to you it was to the other person that replied.

There is no need to be so rude, really there isn't. Manners cost nothing. This is not my fort!. I am capable with figures but I simply need more assistance and didn't know where to turn. It puts me off posting again to be honest. I will provide the information when I can get it but the car garage haven't given the correct paperwork.

PeacefulWaters

GemmaC wrote: »

This reply wasn't to you it was to the other person that replied.

But nobody can tell. Just one of those quirks of not being able to make eye contact on a forum.

There is no need to be so rude, really there isn't. Manners cost nothing.

I think you're being over sensitive. Somebody wants to help. They've told you what's needed to provide that help effectively. They can then steer you in a way that's worth £hundreds to you.

This is not my fort!. I am capable with figures but I simply need more assistance and didn't know where to turn. It puts me off posting again to be honest. I will provide the information when I can get it but the car garage haven't given the correct paperwork.

It is a financial decision. Don't let emotion drive it.

GemmaC

HP loan
Amount borrowed: £9500
No of payments: 36
12% APR (6.57% rate of interest)
Includes £20.00 set up fee
£315.54 per month
Total repayable over 36 months £11, 359.29

Nationwide loan (rather than Sainsbury's)
Amount borrowed: £9500
No of payments: 36
3.6% APR
£278.55 per month
Total repayable £10, 027.80
No extra fees but 28 days interest as a penalty when paying off early. As I mentioned wewould envisage being able to completely repay the loan by the end of the year and I'd overpay to reduce the amount the 28 days intetest is charged against.

I know it isn't black and white I just don't want to be conned in to something by the garage today. Perhaps it won't make much difference over a year I don't know?

Nearlyold

Choose the loan with the lower interest rate. Both HP and Personal loans will charge 1 months extra interest on early settlement but the HP will always have an Option to Purchase Fee (though the fee can be Nil). Don't forget that on both loans you will be paying more interest at the start of the loan

GemmaC

Nearlyold wrote: »

Choose the loan with the lower interest rate. Both HP and Personal loans will charge 1 months extra interest on early settlement but the HP will always have an Option to Purchase Fee (though the fee can be Nil). Don't forget that on both loans you will be paying more interest at the start of the loan

Thank you - this is my instinct too - I think! Is there any way to calculate the propertion of interest through a loan?

Nearlyold

Google Amortisation table or Compound interest loan calculator. Use 3.6% as the annual interest rate on the Personal Loan DONT USE 6.57% on the Car Loan as this is the Flat rate - Use 12% it'll be close enough to the actual annual interest