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Can you overpay PCP finance?

IAMIAM
IAMIAM Posts: 1,392 Forumite
Fifth Anniversary 500 Posts Name Dropper
in Loans
Example.
Car is 20k
Deposit 5k
10k over 48 months
GMFV 5k

Effectively over pay by 9k, have 1k on monthly payments over 48 months and know full well I have the option of returning the car or keeping it. Will this reduce interest to hardly anything and payments which are minimal monthly amounts over 48 months?

Comments

  • IAMIAM
    IAMIAM Posts: 1,392 Forumite
    Fifth Anniversary 500 Posts Name Dropper
    That’s ideally what I want to do 
  • retiredbanker1
    retiredbanker1 Posts: 768 Forumite
    500 Posts Second Anniversary Name Dropper
    It depends.
    Some companies will let you others will let you pay off the loan part but not the balloon part.- unless you are paying it all off.
    It's all in the terms you signed up for.
  • IAMIAM
    IAMIAM Posts: 1,392 Forumite
    Fifth Anniversary 500 Posts Name Dropper
    Its BMW Approved Used I am looking at
  • retiredbanker1
    retiredbanker1 Posts: 768 Forumite
    500 Posts Second Anniversary Name Dropper
    IAMIAM said:
    Its BMW Approved Used I am looking at
    Look at your agreement or phone them up .
  • jay1804
    jay1804 Posts: 464 Forumite
    Sixth Anniversary 100 Posts Name Dropper
    IAMIAM said:
    Example.
    Car is 20k
    Deposit 5k
    10k over 48 months
    GMFV 5k

    Effectively over pay by 9k, have 1k on monthly payments over 48 months and know full well I have the option of returning the car or keeping it. Will this reduce interest to hardly anything and payments which are minimal monthly amounts over 48 months?
    Yes you can, I think the minimum monthly payment has to be £25.
  • IAMIAM
    IAMIAM Posts: 1,392 Forumite
    Fifth Anniversary 500 Posts Name Dropper
    edited 3 July at 8:44PM
    jay1804 said:
    IAMIAM said:
    Example.
    Car is 20k
    Deposit 5k
    10k over 48 months
    GMFV 5k

    Effectively over pay by 9k, have 1k on monthly payments over 48 months and know full well I have the option of returning the car or keeping it. Will this reduce interest to hardly anything and payments which are minimal monthly amounts over 48 months?
    Yes you can, I think the minimum monthly payment has to be £25.
    Is interest effectively eradicated then, if I get my monthly payment down to £25 after say month 3 of a 36/48 month pcp agreement?
  • DrEskimo
    DrEskimo Posts: 2,461 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    IAMIAM said:
    jay1804 said:
    IAMIAM said:
    Example.
    Car is 20k
    Deposit 5k
    10k over 48 months
    GMFV 5k

    Effectively over pay by 9k, have 1k on monthly payments over 48 months and know full well I have the option of returning the car or keeping it. Will this reduce interest to hardly anything and payments which are minimal monthly amounts over 48 months?
    Yes you can, I think the minimum monthly payment has to be £25.
    Is interest effectively eradicated then, if I get my monthly payment down to £25 after say month 3 of a 36/48 month pcp agreement?
    No, because you pay interest on the GMFV (£5k in this case) for the entire duration.
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