Car Loan - low Payments

Big_boy_q

Hi,

I am thinking of purchasing a new car, but would like to have a bubble payment at the end. My thinking has been to borrow £8,000 over 5 years - with the intention of setteling in year 3. My concernt that loan companys will calculate there replayments, with me paying off the interest first, then the amount i have borrowed.

I am aware of PCP, but the plans they tie you in, and I would like to have more flexability if my cercumstances improve.

So the question is: how do I establish how a loan company calculates there interest? And has anyone approached this issue a differnt way?

mrcow

Big_boy_q wrote: »

So the question is: how do I establish how a loan company calculates there interest? And has anyone approached this issue a differnt way?

Most loan companies will charge you 1-2 months interest on early settlement. The interest is worked out on the outstanding balance. You just need to check the t&cs for early repayment conditions.

Different way? Well we did - bought the car outright on a credit card and switched to 0% deals thus paying just about 2% per year on balance transfer fees. Whether you can manage this depends on how good your credit rating is? and how organised you are with money?

Big_boy_q

Thanks for the alternative way - however some companies make you repay the interest first then the loan borrowed. I wish to repay both equally so in three years time I am not pay around £4000

CLAPTON

Big_boy_q wrote: »

Thanks for the alternative way - however some companies make you repay the interest first then the loan borrowed. I wish to repay both equally so in three years time I am not pay around £4000

If you are getting a personal loan the method of payments and interest is determined by the CCAs.
In particular they work essentially like a mortage... you pay interest on the decreasing balance outstanding. Obviously this means you pay more interest at the beginning of the loan because you owe more capital.
Get a copy of the loan agreement before you agree to take the credit... they must show you how much to settle the debt in 1/4, 1/2 and 3/4 of the term.

mrcow

Big_boy_q wrote: »

Thanks for the alternative way - however some companies make you repay the interest first then the loan borrowed. I wish to repay both equally so in three years time I am not pay around £4000

What loan company are you interested in? We can have a look at the T&Cs if you like? Front loaded interest is not something that "normal" loan companies go in for......it's ususally sub prime lenders that have poorer terms etc.