Moneybarn Loan and overpayment - thoughts please?

tonic101

I am considering using Moneybarn to help me with a car loan.

Unfortunately I have a very low credit rating due to some mismanaged accounts and credit cards when I was away travelling last year. My credit rating is very very low, although everything is settled and I do have any debts or CCJ's etc. I hope that this will change in due course and build up my rating.

For now though I am looking at taking out a 25k loan with Moneybarn. It appears they are my only / best option.

Over 5 years with an APR of 30.8% the interest is a staggering
20,509.65 (paying 771.35 per month)

However, I have fairly good cash flow at the moment and would be looking to overpay by 2k a month to repay the loan early.

There is no early redemption penalty in the contract.

However, I am still a little concerned because I have asked both the broker and Moneybarn to give me some figures to work with if I proceed with the loan and overpay by 2k a month.

They say that they cannot calculate, even ballpark until the loan is settled and then I receive interest back. They refuse to be drawn any further on this issue.

I found the overpayments recalc tool here:

themoneycalculator.com/loans/calculators/loan-overpayment-calculator/#!/dealfinder/loans/[/url]

Inserting the figures into the above tool tells me that if I overpay by 2k per month, it will be repaid by the end of this year and I would have paid £3,723.04 interest as opposed to £20,076.00.

Are my calculations correct? Or should I be wary that they refuse to advice me on this?

Any help ASAP would be really gratefully appreciated.

Many Thanks

T

Arleen

What do you drive now? If nothing, but need a car, buy something for 2.5k that you claim you can spend montly on a car anyway and then save for 9 months to buy your dream car for cash (cash discount included).

tonic101

Point taken. However it's a very very good deal that may not be available in 9 months. And for 3.7k (interest)I can take the hit. But not for 20k.

It's more a question of calculation (and possibly fine print) rather than ethics at this point.....

Arleen

This isn't a question of ethics but basic financial sense.

If you have 2.5k+ of disposable income every month, you should have a large amount of money in your bank account already. If you do not this means you are still not financially well, and saving up for few months and delaying gratification will do you plenty of good.
Additionally, it will give you time to rethink that great deal, taking into account the fact that the moment you buy the car, it will lose 20 to 40% of it's value.

tonic101

Can anyone help me with an approximate early figure, please?

Pixie5740

Taking out a £25k loan with an APR of 30.8% is neither your only or best option to buy a car. I'm not sure where the monthly payment figure of £771.35 has come from as I calculate the monthly repayment to be £821.16 for a £25k loan with an APR of 30.8% over a 5 year term.

Edit: In answer to your question, if you can pay £2,771.35 a month towards the loan it will take you 10 months to repay and you will pay £3780 in interest although that figure doesn't take into account any early repayment charge that Moneybarn may include.

tonic101

Pixie5740 wrote: »

Taking out a £25k loan with an APR of 30.8% is neither your only or best option to buy a car. .

Thanks for your reply - appreciated.

What do you mean by the above given my current poor credit rating?

[Deleted User]

I believe Pixie means that there are cars available for less than £25k.

And using your own funds saves a bucket load of interest.

john1002

I used Moneybarn and did exactly that, overpaid within 7 months and then paid loan off, no issues with them, be it my loan was only 8,000. But certainly possible.

Good luck, they are a good company to deal with.

John

Mobeer

Have you looked at a lease? or bad credit loans? It's not too hard to find adverts for lower APR loans for bad credit - 19-23% offers.

Have you looked at the online reviews of Moneybarn to get an idea of the standard of customer services you will be dealing with? The conversation you have had so far doesn't look hopeful.

Why not buy something cheap now, save for a 2.7k/month for a year, then buy something better? You might miss out on a great deal right now, but you also miss out on a lot of interest payments too. Perhaps there may be a nearly as good deal in a year's time, or even a better deal?