Black Horse early repayment

Sam_S3

Hello,

I took out a hire purchase agreement with Black Horse via Motorpoint last week. I'm trying to understand the terms of overpayment and interest and have not been able to get through to them to ask as yet.

My question is if I paid the amount of the loan off tomorrow as an early repayment would I still have to pay the interest? Eg. I borrow 10000, will have to pay an additional 3000 by the end of 5 years (for example), if I have the money today can I just pay the original sum off?

 The guys at Motorpoint were clear that I could skip the interest by paying off early. However the contract isn't absolutely clear- it says you have the option to pay off early but mentions interest very vaguely. If I can't I'm still within 14 days of being able to change my mind so would like to now sooner than later.

Obviously I need to speak to them but it's a but tricky with work so was hoping someone else may have had the same situation and could answer.

Thanks very much,
Sam

BOWFER

I can't see that they would let you just pay the basic amount.
Even if you escape interest by paying it off so early, there would be an admin fee.
They can't just do business for nothing.

Car_54

OP, you would only be charged interest for the brief period between taking the finance and paying it off. So maybe £30 rather than £3,000.

DrEskimo

BOWFER said:

I can't see that they would let you just pay the basic amount.
Even if you escape interest by paying it off so early, there would be an admin fee.
They can't just do business for nothing.

Generally do.

Obviously have to check the T&Cs, but most secured loans on cars do not carry an early settlement fee (which on an unsecured loan can be as much as 2-months worth of interest).

May be a small 'option to purchase' fee of £10, but otherwise should just be able to settle by paying off the settlement figure.

OP, as above, no you do not get charged future interest if you settle early. Interest is calculated daily on the outstanding balance. You will pay interest on what has been accrued up until settlement, but can't be charged interest going forward, since there will no longer be an outstanding balance once it's settled.

BOWFER

DrEskimo said:

BOWFER said:

I can't see that they would let you just pay the basic amount.
Even if you escape interest by paying it off so early, there would be an admin fee.
They can't just do business for nothing.

Generally do.

Obviously have to check the T&Cs, but most secured loans on cars do not carry an early settlement fee (which on an unsecured loan can be as much as 2-months worth of interest).

May be a small 'option to purchase' fee of £10, but otherwise should just be able to settle by paying off the settlement figure.

OP, as above, no you do not get charged future interest if you settle early. Interest is calculated daily on the outstanding balance. You will pay interest on what has been accrued up until settlement, but can't be charged interest going forward, since there will no longer be an outstanding balance once it's settled.

A settlement figure that includes some interest for the period you've had the loan, then maybe a small fee on top - I can accept that might be the case.
But borrowing £10K and then expecting to just pay that same £10K back a few weeks later - I can't accept that.

DrEskimo

BOWFER said:

DrEskimo said:

BOWFER said:

I can't see that they would let you just pay the basic amount.
Even if you escape interest by paying it off so early, there would be an admin fee.
They can't just do business for nothing.

Generally do.

Obviously have to check the T&Cs, but most secured loans on cars do not carry an early settlement fee (which on an unsecured loan can be as much as 2-months worth of interest).

May be a small 'option to purchase' fee of £10, but otherwise should just be able to settle by paying off the settlement figure.

OP, as above, no you do not get charged future interest if you settle early. Interest is calculated daily on the outstanding balance. You will pay interest on what has been accrued up until settlement, but can't be charged interest going forward, since there will no longer be an outstanding balance once it's settled.

A settlement figure that includes some interest for the period you've had the loan, then maybe a small fee on top - I can accept that might be the case.
But borrowing £10K and then expecting to just pay that same £10K back a few weeks later - I can't accept that.

If it's only a day or two, then you wouldn't pay much interest.

I settled the PCP on my used car (just used it to get deposit contribution and free services) after a day or two and it cost me about £8 in interest. Otherwise I simply paid back what I borrowed. Was no small fee.

daveyjp

If there is no incentive in taking finance cancel it within the cooling off period and just pay cash.

Nearlyold

If you are still within 14 days of taking out the finance you should be able to exercise your "Right of Withdrawal" from the finance agreement. Just phone Black Horse and tell them you wish to exercise your right to withdraw from the finance agreement, you'll then have 30 days to pay back the amount you borrowed plus the interest that will have accrued for the time the agreement has been in force which will be a few pounds. 

Couple of points

1) Once you have informed Black Horse you wish to withdraw you cannot change your mind so you must have the funds in place.

2) Withdrawing from the finance agreement  does not cancel the vehicle purchase (I know that's not your intention in this case anyway.)

Outside of the 14 day Right of Withdrawal/Cooling Off Period you can settle the finance at any time, however most HP lenders use the early settlement regulations to calculate the interest rebate (which involves post dating the assumed date of settlement by up to 58 days when calculating the rebate of interest) which more or less comes to the same thing as adding two months interest. 

Sam_S3

Thanks for the replies everyone. I think I'd better get it straight from the horse's mouth but I'm reassured that the overpayment scheme is as Motorpoint explained. 

Btw I don't have the cash yet, but will hopefully have it soon, so I considered this a kind of loan which I don't want to pay all the interest back if can be helped.

Car_54

Sam_S3 said:

Thanks for the replies everyone. I think I'd better get it straight from the horse's mouth but I'm reassured that the overpayment scheme is as Motorpoint explained. 

Btw I don't have the cash yet, but will hopefully have it soon, so I considered this a kind of loan which I don't want to pay all the interest back if can be helped.

So what was the point of asking the question on this forum?