Trying to pay down Santander car finance, any tips? 4 September 2022 at 4:56PM in Debt-free wannabe 5 replies 463 views

honeybee1234

I have HP car finance with Santander, with 23 months left of a 5 year agreement.

I have a clear budget atm, and have fixed my energy for a year. I'm absolutely desperate to get this finance cleared due to my circumstances having changed since taking out the finance, and even more so with everything going on right now, and have been making extra payments where I can towards the balance. This does not reduce the term at all, but reduces the amount of future monthly payments.

Whilst I can't think of anything obvious, is there anything useful anyone may be able to throw at me in terms of overpayments? I've literally been transferring spare cash as and when I have it. The only issue I've had two or three times is I explained last year I wanted to make extra payments and they recorded this, I've then paid extra, only for it not to be applied to the balance. I've then called them to enquire and they said they needed permission to apply the payments to the balance?

Anything at all that may be useful will be gratefully received! 

Brie

if you are overpaying then it will be reducing the amount of interest you will be charged over the coming months.  which is good!

If they are agreeing to apply the extra payments to shorten the term (as opposed to applying them to the balance) and are not doing so then you need to raise a complaint about being financially inconvenienced.  But it sounds like there's simply some miscommunication about what the process is. 

Is there anyway that you can set the minimum amount of the DD to whatever payment you would like so they have to take that amount each month?  I know you can do this with most credit cards but don't know if Santander can do it for loans.     

honeybee1234

Brie said:

if you are overpaying then it will be reducing the amount of interest you will be charged over the coming months.  which is good!

If they are agreeing to apply the extra payments to shorten the term (as opposed to applying them to the balance) and are not doing so then you need to raise a complaint about being financially inconvenienced.  But it sounds like there's simply some miscommunication about what the process is. 

Is there anyway that you can set the minimum amount of the DD to whatever payment you would like so they have to take that amount each month?  I know you can do this with most credit cards but don't know if Santander can do it for loans.     

They said paying extra will reduce the monthly payments, but the term will remain the same. That's fine. It's more that I'm paying extra payments and they receive them, but don't always apply them to the balance. It's odd. So my money is sometimes sat out of my account, in their account, but that's it.

I'll ask about the direct debit and see what they say. 

sourcrates

Instead of making overpayments and getting problems with the firm's inability to deal with such things, why not save the money in your own account, then when the pot is sufficiently full, clear the debt all in one go?

You will most likely save a similar amount of interest, doing it that way, but without the hassle overpaying seems to create.

fatbelly

I agree with the above. Save a lump sum. Ask for a settlement figure

honeybee1234

sourcrates said:

Instead of making overpayments and getting problems with the firm's inability to deal with such things, why not save the money in your own account, then when the pot is sufficiently full, clear the debt all in one go?

You will most likely save a similar amount of interest, doing it that way, but without the hassle overpaying seems to create.

It's a good idea! Only thing is I don't foresee being able to save enough in two years to do that before it is paid off. Also they won't allow me to increase the direct debit as the term agreed has to remain the same and they say this would decrease the term, so I think I'll make a regular extra monthly payment and make a complaint if they keep the money without applying it again.