Maths help

kippaxman
kippaxman Posts: 24
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Hi all
I have a new car which is financed at 9.9% APR. My overall interest is £11400 for the amount I have financed including a balloon payment of £25000 after 4 years which I will pay off when I retire.

First direct offer loans at 6.4%apr. If I take a loan out off them over 8 years & pay my finance off after 4 years when I retire I only pay £8100 interest. 

However my question is after 4 years of the loan will I have £25k to pay off or will it be more. To close the loan early it is a month +28 day’s interest. I realise the bulk of the loans interest will be paid at the start of the loan but have no idea which is the best option. Do I stay with finance at 9.9%apr or take out a loan at 6.4%apr, both will be paid off in 4 years when I retire.

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  • molerat
    molerat Posts: 31,519
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    edited 29 October 2023 at 1:48PM
    6.4% will be cheaper than 9.9%
    What will be the loan amount needed to pay off the finance ?
    From that, with the aid of calculators available on the net, you can work out the balance at the mid point.
    No one will be able to answer without that figure.

  • Thx for looking in, 33000 is the financed loan
  • molerat
    molerat Posts: 31,519
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    Putting £33K at 6.4% APR into a loan calculator gives the capital outstanding at mth 48 as just under £19K.  Interest at that point will be around £100 pm. Repayments are around £440 pm.
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