Moneybarn Car Finance

foxy-stoat

What is your APR interest rate?

No worries, just looked on their site.

£22990 X 30.4% = £6988.96 / 12 = £582.41

So on month 1 your £698 cleared £115.59 worth of capital, the rest is interest.

Then month 2 it would be £22990 - 115.59 X 30.4% / 12 and so on.

I would be more worried that if you see this out to the end you would of paid £41,880 for a car that cost £22,990 and would be worth probably about £10,000.

foxy-stoat

jonnybinthemix wrote: »

To me, this seems like front loaded interest - since they aren't offering a rebate on previously paid interest. The settlement figure is the capital remaining on the car, plus one month of interest as the early termination fee. Am I wrong?

You do not get a rebate of interest, interest is charged daily every month on the owing balance - front loaded interest has not been used for years.

MEM62

jonnybinthemix wrote: »

Seems overly confusing, but I suspect that's the way it's designed so us mere mortals don't question the big finance god's who are making billions from us.

It makes sense once you have your head around it. And they don't make billions out of all of us, only those with shiny car syndrome.

There have been a number of posts on here asking about car finance and I usually respond by encouraging them to add up the cost of the car (or depreciation if they turn cars over quickly) and the cost of the interest / finance charges and look at what the true cost of owning that car is. Whether that has actually put any off the idea I don't know but I just cannot see the point in paying interest, particularly at 30%, to finance an asset with a value that falls like a stone.

jonnybinthemix

Makes more sense, thanks guys.

I agree - it really wasn't the best plan to begin with, but as you say - I had shiny card syndrome.

One more question if I may...

If I make overpayments (I believe I'm allowed to make one every month), does this come completely off the balance of the car? So if my settlement figure is 18k now, and I pay an extra 500 per month, would that be 500 extra from the balance of the car? The interest wouldn't adjust again?

[Deleted User]

Yes, any overpayment comes entirely off the capital, as the interest is already covered in your monthly payment.

jonnybinthemix

I am pleased to say that I have identified a way for me to get out of this finance deal.

I went to a dealer and picked out a different car, explained my problem and asked for their help and advice. I found a car for £14k. As above the settlement on mine is £18.5k, so the garage got in touch with the finance agency and the end deal was if I put £3151 cash in (odd amount), they're finance the other car (which is much more cost effective to run) @ 14.1% with monthly payments of £376.06.

So, thanks for the help and the nudge here guys.

Saving of £321.94 per month and an interest rate change from 30.4% to 14.1%. From what I looked at online, 14.1% seems to be much more reasonable and more inline with what I should expect to pay.

foxy-stoat

jonnybinthemix wrote: »

I am pleased to say that I have identified a way for me to get out of this finance deal.

I went to a dealer and picked out a different car, explained my problem and asked for their help and advice. I found a car for £14k. As above the settlement on mine is £18.5k, so the garage got in touch with the finance agency and the end deal was if I put £3151 cash in (odd amount), they're finance the other car (which is much more cost effective to run) @ 14.1% with monthly payments of £376.06.

So, thanks for the help and the nudge here guys.

Saving of £321.94 per month and an interest rate change from 30.4% to 14.1%. From what I looked at online, 14.1% seems to be much more reasonable and more inline with what I should expect to pay.

Well done I suppose....if you think your saving money by paying another £3000 and still keep paying £300 a month.

I was thinking you were going to sell the car, clear the finance and buy a cheaper car with your £3000 and have no monthly payments.

Oh well.

Herzlos

What's the value of yours currently? Settlement of £18.5k and having to put £3.1k in to clear it sounds like you're getting £15.4k on it, and you're trading that in against a £14k car so you're only really about £1.4k equity.


Most of the savings will come from the interest rate drop from 30% (outrageous) to 14% (high but normal).


If you're really looking to save money, you should be looking at cars worth half of that (or less). Plenty of nice cars in dealerships for under £7k

iolanthe07

30% interest on a depreciating asset such as a car is madness, imho.