High APR on HP

Ben95

First time poster so apologies if this is in the wrong section.
August 2019 I had to get a vehicle, however due to poor credit history and poor decision making I took out a HP plan with high interest and APR rates. I have a satisfied CCJ on my credit history which is due off in 12 months, no problems other than this.

I want to avoid paying as much in APR and interest if I can, but can't afford £5.5k settlement figure at this moment. Due to the previously mentioned CCJ a personal loan isn't available, I can't think of any other way to pay it off other than diverting longterm savings towards paying the settlement fee. (I'd still be able to contribute the yearly £4k to my LISA later in the tax year) 
I'm all ears to suggestions on how to improve my situation with the vehicle
Thanks in advance 

neilmcl

Use your savings and settle the finance.

DrEskimo

How high?

Use savings or trade car in a get something cheaper.

Ben95

DrEskimo said:

How high?

Use savings or trade car in a get something cheaper.

19% interest 39% APR, very poor decision. From my understanding trading it in at this point, I'd still have to sign up to another contract on poor terms, which should improve in 12 months once the CCJ is cleared from my credit file. I also think that I'd have negative equity on the car at the moment. 

I do think using savings will be the best route, but wanted to see if anyone had other suggestions I didnt think about 

DrEskimo

Ben95 said:

DrEskimo said:

How high?

Use savings or trade car in a get something cheaper.

19% interest 39% APR, very poor decision. From my understanding trading it in at this point, I'd still have to sign up to another contract on poor terms, which should improve in 12 months once the CCJ is cleared from my credit file. I also think that I'd have negative equity on the car at the moment. 

I do think using savings will be the best route, but wanted to see if anyone had other suggestions I didnt think about 

Yes savings would be better, but you may not want to or can pay off the entire £5,500. So trade/sell, pay off the negative equity and then buy another car with whatever your left over budget is.

It depends entirely on how much savings you have and how much of it you want to use towards a car?

AdrianC

You owe somebody £5,500 at 39% APR, £2,145 of interest per year.

How much interest are you earning, after tax, on those savings...? 1% at most? £55...? That means it's costing you £2,090 not to pay it off using those savings...

Goudy

If you have the money saved, it's a no brainer, pay it off with your savings.

You can always use the money from what you would have paid monthly to put back into your savings.

As Adrian says, the interest on savings at the moment is so low, it'll actually cost you very little, if you gradually put the savings back month by month, it'll actually cost you less than his £55 calculation.

Even if you did have access to a cheap loan, it'll still cost you at least triple what your savings are currently making.

Having settled credit on your financial record can't do you any harm either.