Advice regarding my car.

Dontletmeletyougo

Hi,

I was just wondering if anyone could give me some advice.

I currently have a Vauxhall Astra on a pcp deal. I pay £204.48 a month (already paid 12 months) and I have 36 months left on this before I have a final balloon payment of roughly £6000.

The original finance amount I took out was £13223.94. By the time I have paid this amount over 4 years and settled the balloon payment my total outlay will be £15632.

If I wanted to settle the outstanding balance at the moment it would be £11693.73.

I've been told that my flat rate interest is 5.5% and the Apr on finance is 6.4%. I find a lot of this confusing.

I've decided I'd like to keep this car and in hindsight would like to get out of the trap of PCP towards the end.

I've been pondering whether or not to take out a low interest loan with 3.2% Apr which also gives me flexibility to overpay.

I'm just wondering whether this is a good idea. I think I'd take the loan over 4 years but intend to pay it off over 3.

Any advice before I do this?

Thanks.

Nobbie1967

How big is the early repayment charge? This will be the biggest factor affecting whether to settle early. A back of fag packet calculation suggests you'd save £800 by dropping the APR by 3%, plus more if you overpaid on the new finance deal.

Dontletmeletyougo

I forgot to even ask that Nobbie1967.

I'll phone and enquire now with the car finance company.

Dontletmeletyougo

I've just contacted them and they stated no early repayment charges. My settlement figure is what they quoted and that only.

Nobbie1967

In that case it looks like a good idea as long as you can get the new loan at that rate. I always assumed they had an early repayment charge with finance, but apparently not.

facade

You could keep it on, and simply hand it back after 3 years (when the warranty runs out) or 3 years & a couple of months if you have to pay back half of the full £15632.

I doubt if a 3 year old astra is worth anywhere near £7500, or a 4 year old one anywhere near £6000 either.

wmathias

Is he saying that if you repay early, you still pay the full interest as though you'd had the deal for the full term, or if you pay off early, all further interest costs stop? (so you'll actually save instead of paying 2 interest payments) A crucial difference.