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

IAMIAM

Thats great, so around month 21, as you stated, I would have a settlement figure of around 9.8k meaning I would have paid how much in interest roughly....could you send me the spreadsheet, so i could maybe adjust the figures?

ev51

Excel Formulas to set up the "overpayment" sheet (remember some rows have been hidden).

Change cell A4 to "Payments" and cell B4 to =ROUND(PMT($B$2/12,$B$3,-$B$1,0),2) to calculate "normal" payments.

Change the numbers in pink cells for different loan amounts, interest rates, months and OFP/GFV's.

Grey_Critic

Seems like a lot of work being put into this but it is still up to the finance company to agree. Does not matter what we say if they say NO

IAMIAM

Grey_Critic said:

Seems like a lot of work being put into this but it is still up to the finance company to agree. Does not matter what we say if they say NO

The finance company say yes

IAMIAM

I now have the full Zopa App. What I like is you can keep over paying as much as you want (it even gives you provisional monthly payments if you make said overpayment). The sneaky thing is that it will always recalculate the monthly based on GMFV staying as is, but as soon as you put a number in that will close the whole loan down, it recalculates with the GMFV paid off too and rebates all the interest.

So I'll just keep doing that until I can input 10k overpayment and that says loan will need to be fully repaid otherwise they cant take the payment!

IAMIAM

ev51 said:

Excel Formulas to set up the "overpayment" sheet (remember some rows have been hidden).

Change cell A4 to "Payments" and cell B4 to =ROUND(PMT($B$2/12,$B$3,-$B$1,0),2) to calculate "normal" payments.

Change the numbers in pink cells for different loan amounts, interest rates, months and OFP/GFV's.

If my balance is now 22400, I have a 9.04% interest rate, GMFV 9,668.75, 47 months to go.
What is the maximum I can overpay as a lump sum to leave me just paying the interest only every month on the 9668 GMFV which is due for payment on the the 48th month?

Goudy

Can you not just ask for a settlement figure, then take the GFV from that figure?

Pay the difference and that should just leave you with the interest in the GFV and the GFV.

Mildly_Miffed

IAMIAM said:

I now have the full Zopa App. What I like is you can keep over paying as much as you want (it even gives you provisional monthly payments if you make said overpayment). The sneaky thing is that it will always recalculate the monthly based on GMFV staying as is, but as soon as you put a number in that will close the whole loan down, it recalculates with the GMFV paid off too and rebates all the interest.

So I'll just keep doing that until I can input 10k overpayment and that says loan will need to be fully repaid otherwise they cant take the payment!

That's how PCPs work.

They own the car until you pay the balloon. Then you own it.

The balloon is the predicted value at the end of the term.

You can pay down all BAR the balloon, sure, and just pay lower monthlies through the term - but if you want to reduce the balloon, you're closing the PCP down by buying the car.

You're borrowing the full price of the car (at 9%) interest, but the deal is structured so all bar the balloon amortises over the term.

IAMIAM

Goudy said:

Can you not just ask for a settlement figure, then take the GFV from that figure?

Pay the difference and that should just leave you with the interest in the GFV and the GFV.

Is this accurate? 

Goudy

IAMIAM said:

Goudy said:

Can you not just ask for a settlement figure, then take the GFV from that figure?

Pay the difference and that should just leave you with the interest in the GFV and the GFV.

Is this accurate? 

I would think it's accurate enough for what you are trying to do.

With a PCP you can't over pay towards your lump sum (GFV).
All you can do is settle completely or over pay up to that GFV figure.

The settlement figure will include a rebate on all interest left to pay (bar 56 days as that's all they can charge you to settle) of both the monthly payments part and the GFV.

Now if you just take the GFV from the settlement figure and pay the difference as a one off payment, all that's left is the GFV and the interest that will incur. 

Now all you are borrowing is the GFV but the capital for that isn't due until month 48, so all you should pay each month is the interest on the GFV until the month the GFV is due (48).

Over payments are calculated in line with early settlement, so any over payment will be treated to the same fee/charge of 56 days interest.