Car Finance - paying off early - any penalties?

Arunmor

What quotes are you getting for your business insurance?  That may sting a bit!

Grey_Critic

*** would probably pay off £100-£200 a week doing delivery gigs just paying off the loan with the profits of delivery. That way the car is essentially paying itself off as a workhorse***

What would the cost of insurance add to your costs?

DrEskimo

seatbeltnoob said:

GDB2222 said:

Some PCP contracts prohibit or restrict business use.  So, thats something the OP needs to check. 

I assume that Amazon check insurance, but possibly not the finance? 

not interested in pcp, looking at hire purchase for 2015 car. pcp is for new cars or nearly new cars arent they?

You can get PCP on used cars too - it's just a variation on HP.

Secured HP Finance either through the dealer you are buying from or arranged privately is not likely to be a good rate. Any reason you're not considering a personal loan?

I would personally just save the payments until you had the money (on top of your emergency fund) and pay a small amount on credit card (e.g. holding deposit) to save on interest costs and still get some protection, but depends how urgent it is?

seatbeltnoob

jimjames said:

Going left field, if you have £10k in the bank and are buying a car for £8-10k then use your savings. You can then add the £200 gig money to your savings whenever you want. Makes no sense to pay 10%+ interest on a loan but get 4% or less on your savings. If you want some protection then pay a small amount on credit card.

£10K cash is contingecy. I am self employed and renting privately so I need to have that liquid cash available. Assume I have no savings. I shouldnt have mentioned the £10K because its not really available for the car. I'm not afriad of the cost of financing. it is what it is. I would rather use the car to work off its debt. 

I'll avoid the interest by overpaying aggressively from future money earnt. Not by dipping into contingency 

seatbeltnoob

Grey_Critic said:

*** would probably pay off £100-£200 a week doing delivery gigs just paying off the loan with the profits of delivery. That way the car is essentially paying itself off as a workhorse***

What would the cost of insurance add to your costs?

my mistake for giving too much information in OP, ive deleted those now. FYI Inurance is a top up provided by amazon and costs 80p an hour for the time I work. Full hire and reward. For every £400 I earn, I pay aorund £23.

It used to be better before. Full h&r all inclusive. amazon used to pay for us. 

Please no more unrelated questions about side issues. 

GDB2222

seatbeltnoob said:

Grey_Critic said:

*** would probably pay off £100-£200 a week doing delivery gigs just paying off the loan with the profits of delivery. That way the car is essentially paying itself off as a workhorse***

What would the cost of insurance add to your costs?

my mistake for giving too much information in OP, ive deleted those now. FYI Inurance is a top up provided by amazon and costs 80p an hour for the time I work. Full hire and reward. For every £400 I earn, I pay aorund £23.

It used to be better before. Full h&r all inclusive. amazon used to pay for us. 

Please no more unrelated questions about side issues. 

That’s interesting about how the insurance works. Clearly, you are on top of that aspect. 

seatbeltnoob

GDB2222 said:

Do you get to choose the finance company? Don’t dealers have just one that they offer you?

matt_drummer said:

Usually, yes.

That is why I suggested the OP finds a car they like and see what the finance deal on offer is.

Thing is, it's hard to get the finance terms off the finance company website. I dont want to apply for a loan - get them to do a soft search and then get given the copy of the actual loan terms just to know what they are. All the car finance websites. If you go to their website the t&cs is for using their website. 

Someone out there must have got a HP on a car and decided to pay it off early. 

The last loan I had was a bounceback loan which was interest free for the first year. Then I aggressively overpaid and cleared the loan. No penalties. No fees. 

Asking the dealer about overpaying probably isn't going to go down well. they get comission from their finance company and I think the payout they get will be determined a little bit by how much interest the borrower pays, directly or indirectly. Overpaying or paying off early probably isn't going to be great for their kickback. 

matt_drummer

I have never had a loan or car finance that I couldn't pay off early and I have had plenty over the years.

You're over thinking it.

The most you'll pay is a bit of early settlement interest.

You may or may not be able to pay small amounts off each week, probably not.

But just save your earnings and settle at the earliest opportunity.

GDB2222

I've just bought a new car and it’s straightforward to get a copy of the blank order form, including the T and Cs on the back. 

I’d expect that the dealer can give you similar details of the finance that they can offer. You’ll have to double check that the details of your own offer are exactly the same, but it seems unlikely that there’ll be a difference. 

Grey_Critic

Are the finance company prepared to accept overpayments as you propose. Yes you can pay a loan off early - they will give you a settlement figure for that but their business model is built on X number of payments and  that is what you agree when you take the loan. That is why it is called a finance AGREEMENT and is a LEGAL document, you are trying to change the terms and conditions after having signed it. 

They would be within their rights to refuse, cancel the agreement and require you to repay the loan in full