Car finance

Breslin22

Heya folks I hope someone out there can help me I took car finance out in April 2018 over 60 mths but paid it all up in full in 40 mths when I rang the finance company they told me I was nt due and refund for the 20 mths interest I didn't use and I paid the entire 60 mths in total 

DrEskimo

What they probably mean is you don't get refunded any payment (since you haven't been charged the interest on the balance from the remaining 20-months yet).

The saving comes from the fact that your settlement figure at month 40 is less than the remaining 20 monthly payments you would have paid had you not settled early.

Grumpy_chap

Breslin22 said:

Heya folks I hope someone out there can help me I took car finance out in April 2018 over 60 mths but paid it all up in full in 40 mths when I rang the finance company they told me I was nt due and refund for the 20 mths interest I didn't use and I paid the entire 60 mths in total 

You'd only get a "refund" of interest in the way you describe if the interest was front-loaded and that is no longer permitted on consumer credit.

What actually happened is each monthly payment was the interest for that month plus a bit of capital.  So, when you pay the balance early, the interest beyond that point has never been charged.

maxsteam

There are many different types of car finance. If you took out a normal personal loan, you would save some interest by paying it off early. This is not necessarily the case for every variant of car finance. You should dig out the finance agreement as it's likely to say something about early settlement.

It's far far easier to buy a car for cash imho.