Barclays Partner Finance Advice please.

Iancooper

Hi, we have a loan with Barclays Partner Finance for a static caravan. We have, for personal reasons, decided to sell the caravan, but we can't until we clear the finance. Unfortunately the value of the van is a lot less than the outstanding loan amount.

A friend of mine has said that I should ask them for a settlement figure and to get it split up into capital and interest. Then make an overpayment of £50 less then the remaining capital amount. Then once that has cleared to ask for another settlement figure and they should only charge me interest on the remaining £50.

e.g. Settlement figure of £14000 made up of £8000 capital and £6000 interest. If I pay £7950 overpayment it should come off the capital side of things. So the new figure will only be the interest on £50 hence saving me £6000.

I have contacted Barclays but it's like talking to a brick wall. They have said that the settlement figure is £14000 and the system will not allow then to split it into capital and interest.

Has anyone else experienced any thing similar or any advice please.

Thanks

[Deleted User]

You don't need to split it into capital and interest.

The sum will be the remaining balance plus two months interest. If you want to reduce the interest, then pay most of the outstanding balance and let the next DD clear the balance.

If your settlement figure is 14k, then your balance will be something north of 13k, depending on your interest rate.

Iancooper

Deleted_User wrote: »

You don't need to split it into capital and interest.

The sum will be the remaining balance plus two months interest. If you want to reduce the interest, then pay most of the outstanding balance and let the next DD clear the balance.

If your settlement figure is 14k, then your balance will be something north of 13k, depending on your interest rate.

The actual balance is £16000 and they have put £2000 reduction on the interest for early repayment. My question was if the £14000 is made up of £8000 Capitol and £6000 interest and I pay £7950 off the capital then should the remaining interest only be charged on the last £50 of capital?

IAmWales

Iancooper wrote: »

The actual balance is £16000 and they have put £2000 reduction on the interest for early repayment. My question was if the £14000 is made up of £8000 Capitol and £6000 interest and I pay £7950 off the capital then should the remaining interest only be charged on the last £50 of capital?

But the capital element is not going to be £8000, or anywhere near that low. Interest is not front loaded, as zx81 explains the figure they have given will be capital plus two months interest.

[Deleted User]

Again, the figures are nothing like that. The settlement figure will be the capuital plus two months interest.

So let's say the capital is around £13,500 with £500 interest, even if you have a very high rate. You can minimise the interest by paying the bulk of the balance and letting the next DD clear the remainder.

I'd guess the capital is actually close to £13,800, meaning there's just a couple of hundred pounds of interest to avoid.

You're not going to be saving the thousands you think you will.

davieg11

Yeah, all loans are a big con. I had 8 months left on my loan and phoned for a settlement figure and it was like £35 cheaper (all in) than continuing to pay it monthly. I asked why can this be? , and was told most of early payments were interest!!! So I can see where you friend is coming from by saying you can save all that interest by paying it off early but who knows how it works??? I learned my lesson and will stay clear of bank loans.

[Deleted User]

It's not a con. It's simply that interest is obviously higher on a larger balance.

davieg11

Deleted_User wrote: »

You don't need to split it into capital and interest.

The sum will be the remaining balance plus two months interest. If you want to reduce the interest, then pay most of the outstanding balance and let the next DD clear the balance.

If your settlement figure is 14k, then your balance will be something north of 13k, depending on your interest rate.

That's the problem! You get a £10k loan for 4 years, your payments are £271 per month. £13,008 to pay back. You pay for say 1 year £271 x 12 = £3252. You phone and ask for settlement figure and they say £9100. You go wait a minute I've paid £3252 off a £10k loan and still owe £9100. Total con! Or you pay £271 x 41 = £11,111 and ask for settlement figure. You have 7 x £271 to pay = £1897 and settlement figure is £1862. Stay clear of bank loans unless you get low rates at 3 - 4%

davieg11

Another way to look at it. £10k over 4 years at 13.6% interest = £271 per month , £3020 in interest = £13020 to pay back.
£10k over 1 year at 13.6% = £895 per month , £751 in interest = £10,751 to pay back.
So after paying £271 for 11 months = £2981, WHY can't the settlement figure be £10,751 - £2981 = £7770 instead of around £10,000.
The bank would still have made its £751 profit in 1 year

sourcrates

Your agreement will be covered by the consumer credit act 1978.

It will state the amount you will repay, the number of payments, the interest payable, and the time period the loan is taken over.

These are known as the "prescribed terms" of your agreement, there will also be a clause that covers early repayment, and again, terms that will cover that eventuality.

You will of signed this agreement in good faith, so you are bound by its terms, you simply cannot ask the bank to ignore, or re-write those terms, some years down the line, because they no longer suite you.

That is essentially what you are asking them to do, and they will not do it.

You must follow the terms for early repayment as set out in your agreement.

That's it.

[Deleted User]

davieg11 wrote: »

So after paying £271 for 11 months = £2981, WHY can't the settlement figure be £10,751 - £2981 = £7770 instead of around £10,000.

Because that's not how maths works.

If you want equal amounts to come off the capital each month, then you need to setup a loan where your first payments are much larger than the last, which is simply unaffordable for most people.