PCP - How to overpay and reduce interest, is it worth doing?

IAMIAM

Thanks for all this. Is there any way I can work this out....

Currently - Loan £22.5k, 48 months, £9.5k GMFV, Monthly £390, rate 9%

If I was to overpay and create a monthly payment of £750 instead of £390 via extra monthly bank transfer (I can do this and future monthly payments are adjusted accordingly but term isn't). At what stage of the 48 months, paying £750 a month would I be in a position to settle the loan with a settlement figure of around £10k (ie the GMFV moved to a 0% MT Card).

sheslookinhot

28 months would clear £22,500. (Assume this includes interest on the loan). Check with finance provider for a cost to clear the GFV.

paul_c123

Have you checked you can make overpayments?

Grey_Critic

Does not matter what we say it is the finance company who will have the final word. 

IAMIAM

sheslookinhot said:

28 months would clear £22,500. (Assume this includes interest on the loan). Check with finance provider for a cost to clear the GFV.

Yes ZOPA allow overpayments. My online account says £18.8k balance to clear at £390 for 48 months with a rate of 9% (+ a GMFV of £9668).
So if I did £750 per month instead (which I can, as a bank transfer monthly, interest is recalculated daily)....is it month 28 that I get to a point where I can settle the whole pcp plan with a settlement figure of around £10k?

IAMIAM

sheslookinhot said:

28 months would clear £22,500. (Assume this includes interest on the loan). Check with finance provider for a cost to clear the GFV.

Not it doesn't, it is 28.8k with all the interest up to 48 months, all in. The original loan is 22.5k.

ev51

I had a quick look at your numbers and I think the overpayment would see the loan almost clear by month 20, leaving a smaller final payment in month 21.  To settle the GFV early may cost around £142 in deferred interest.

These figures may be completely wrong, happy to re-work if I've missed something!

Payments amortised below (some rows hidden to make screenshot easier):

IAMIAM

I really really appreciate this, thank you!
I think the £12832 isn't the starting balance?

I have checked the exact numbers online with Zopa.

£22600 Starting Loan.

It says....£18846 left to pay over 48 months at £392 and £9668 payment month 49. Rate is 9.049%

So if I do £750 per month commencing Sept which is £358 overpayment monthly, I would be in a position to request settlement at month 21/22 and pay a balance of circa 10k via a 0% money transfer ideally....?

ev51

I was working on the 22500 figure mentioned in your post above.

22500 - 9668 GFV = 12832 loan to amortise (remember your total monthly payment includes flat interest of 71.70 on the GFV).

Borrowing 22500 to full term with interest will cost you 28400.

ev51

Or put another way 12832 + 2466 + 3441= 18739

2446 interest on loan

3441 interest on gfv

18739 + 9668 = 28407