Refinancing my car on HP. Can someone help?

Danjames90

I pay £240 a month for my family car on a HP agreement. I initially took this out over 60 months so I've got about 3 years to go on it. Am I right in thinking the interest is front loaded so although the loan was for £10,000 ish the statements says £14,456 with an APR of 15.6%.

I can settle the loan today for £7,196.

I'm looking to reduce my monthly payment if I can any maybe save long term on the APR.

Can someone please help with what they think the best option would be?

Thanks.

Cornucopia

I'm pretty sure the only way out of the HP agreement is to either pay the settlement figure, hand the car back (which I presume you don't want to do) or trade the car, settling the finance in the process.

In order to pay the settlement figure, you'll possibly want to borrow from elsewhere on an unsecured basis (i.e. a personal loan) and you should easily be able to beat 15.9% APR unless your credit history is poor.

You may not save that much per month unless you extend the term, though.

Tesco Bank are quoting:

£7000 over 36 months = £209 pm @ 3.8% APR
£7000 over 48 months = £160 pm @ 3.8% APR
£7000 over 60 months = £131 pm @ 3.8% APR

Foxy-Stoat_3

Call the lender and get a settlement figure, it may be more than you are expecting.

colino

Unless you have the cash to settle up, don't. All you are doing is contemplating paying interest on interest for a depreciating asset.

Herzlos

Surely it's worth taking out a better rate loan for the settlement figure for the remaining term? Assuming, of course, you can do enough better than 15.6% to cover any early payment charges.

Danjames90

The settlement figure I know. It's £7,196. I don't have great credit so looking for options I guess. As long as I can get finance better than 15.9% APR then I'm laughing right??

colino

Why? You've already paid out interest on the car and the settlement isn't going to be a discount, your next loan isn't going to be free, so in effect you might be shifting finance houses, but your not going to save an awful lot.

gzoom

colino wrote: »

Why? You've already paid out interest on the car and the settlement isn't going to be a discount, your next loan isn't going to be free, so in effect you might be shifting finance houses, but your not going to save an awful lot.

But if the OP settles now, they are 'saving' some money in interest (15% in pretty high), as the settlement figure will include a rebate amount for settling the finance early. Using the earlier post of a bank loan at at 3.8%, they are saving £40/month over 36 month, which £1440 over 3 years. Not a huge amount, but not bad for a few minutes of form filling and a few phone calls to pay of the finance.

Cornucopia

It comes down to the figures. It wouldn't take a much higher APR for there to be no point in moving.

gzoom

Cornucopia wrote: »

It comes down to the figures. It wouldn't take a much higher APR for there to be no point in moving.

Depends on how much hassle your willing to put with to save some extra £££. We went down the PCP route on one of our cars so that we could get an extra £1000 of dealer 'contribution'. Than settled the account after 1 month, paid £200 of early settlement fee, so total worked out as saving £800 overall compared to buying just cash.

Total price of the car was over £35k, so the £800 saving was less than 2% total price, for some that mat not be worth the hassl, but if the saving is there why not go for it, marginal-gains worked for TeamSky so why not apply it to your finances