Please help me to understand the logic of my MoneyBarn Disaster?

[Deleted User]

You borrowed £32k for a car. You stopped paying the loan so they took the car back and used the sale to pay off some of the amount outstanding. You owe the rest. if you had kept to the agreement you would still have a car and still be making the payments that you owe.

enthusiasticsaver

As a rough guide interest at almost 40% per year on a £15k loan would have been around £6k so by the time the proceeds of £11k were received the loan would still have £10k outstanding. Interest at 40% on this per year would be a further £4k EACH YEAR so if you have paid no payments this is why you still owe £14k. I am guessing this has been ongoing so the interest is still piling up.

Get it paid off and learn the lesson. Know what you are signing up to and 39.9% interest is ridiculous especially if you had the cash to pay outright. The car and repairs are a red herring. You borrowed £15k with minimum £6k each year interest and only realised £11k on the car when sold. All the time the loan is still with them you will find the interest keeps increasing the loan especially if you are not making any repayments.

Terry_Towelling

Frankly, handco, unless my maths is off the mark (quite possible) your figures make no sense at all. Can someone please cast their eyes over them, because I get the following (working approximately).

Paying a total of £32K over 60 months requires you to pay about £533.33 per month. However, interest at approx. 40% would mean that you'd still have about £7K left to pay off even after the full 60 months. That can't be right.

You paid for the car for about 20 months (ignoring any missed payments) and they then sold it for £11K. Your payments then obviously stopped but the debt kept increasing due to the interest charges. However, even this would not see the debt rise to much more than £7K by this point during its term.

So, what's the deal with all these figures you're giving us?

Mr.Generous

Handco, do you understand the difference between hire purchase and a loan?


Have you ever heard a phrase about someone and their money being soon parted? Sorry to be blunt but you have been a fool. Irresponsible and careless and it has cost you dear.


Did you believe that a used car salesman had your best interests in mind and was not considering his own commission?



If you had the money was the rate of interest you were getting on your savings in the region of 35%? If so it might well be worth paying 4% over the odds for the flexability of still keeping your cash. I suspect however that your savings are paying you less than 4%. Have a think about that.

ciderboy2009

Terry_Towelling wrote: »

Frankly, handco, unless my maths is off the mark (quite possible) your figures make no sense at all. Can someone please cast their eyes over them, because I get the following (working approximately).

Paying a total of £32K over 60 months requires you to pay about £533.33 per month. However, interest at approx. 40% would mean that you'd still have about £7K left to pay off even after the full 60 months. That can't be right.

You paid for the car for about 20 months (ignoring any missed payments) and they then sold it for £11K. Your payments then obviously stopped but the debt kept increasing due to the interest charges. However, even this would not see the debt rise to much more than £7K by this point during its term.

So, what's the deal with all these figures you're giving us?

Putting the details into a loan calculator gives a repayment of £520 per month.

Assuming 4 months of missed repayments, the car actually selling a month after reposession and a bit for the various charges that will have been added then you get close to the figure quoted as currently outstanding - it will also still be increasing at over £400 per month.

Terry_Towelling

ciderboy2009 wrote: »

Putting the details into a loan calculator gives a repayment of £520 per month.

Assuming 4 months of missed repayments, the car actually selling a month after reposession and a bit for the various charges that will have been added then you get close to the figure quoted as currently outstanding - it will also still be increasing at over £400 per month.

I just put the figures into the MSE loan calculator and they came up with 60 monthly repayments of £571, giving a total repayable of £34280. That will be why my figures were way off because I based them on a total payback of £32K with 39%APR - as provided by OP.

So, the question to OP still stands; what's the deal with the inaccurate figures we're being given and why are they inaccurate?