Billing Finance early settlement

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tech2_2
tech2_2 Posts: 274 Forumite
in Loans
Want to pay off my finance 6mthsd early... Called them today only to find out that there is no reason to settle earler, because wait to for it.....

To pay it off now £1180.00
Pay it of each month to Dec £1127.00

WOW I save £50... They told em that all the finance intrest was loaded at the front of the loan so now all I am paying off the actual car....

The reason I want to settle is to sell the car as its costing me £160+/month to petrol and want to by another....

Is this right? I was not told this at the time the finance was explained to me. I have bought cars on Finance before and was under the impression that each month you pay so much car and so much finance.. So settle early saves you some oney on the intrest....

Can I do anything about? or Can I complian to any one?

Wrtting this on behalf of a friend at work

Any help would be really good.

Tech2
If Carling made web-sites this would proberly be the best website in the world :T

Get your SOA done here.... http://www.makesenseofcards.co.uk/soacalc.html

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  • stephane_2
    stephane_2 Posts: 3,076 Forumite
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    Have you looked at your credit agreement? They are probably right....very often you start paying the interest then the car itself. Can you complain...well not really, for what reason?
  • Rafter
    Rafter Posts: 3,850 Forumite
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    Generally there is some kind of interest penalty for early settlement. With only 6 months to go that is probably why it is costing you more to settle early than to let the loan run its course.

    You just need to work out whether 1 weeks petrol difference is worth waiting another 6 months or whether you can easily save that if you get a more efficient car?

    R.
    Smile :), it makes people wonder what you have been up to.
  • tech2_2
    tech2_2 Posts: 274 Forumite
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    Rafter wrote: »
    Generally there is some kind of interest penalty for early settlement. With only 6 months to go that is probably why it is costing you more to settle early than to let the loan run its course.

    You just need to work out whether 1 weeks petrol difference is worth waiting another 6 months or whether you can easily save that if you get a more efficient car?

    R.


    Yes thats true and taking that in to account with fuel it will cost another £1100+ in fuel... So the maths speak for themselves.:rotfl:

    Thanks for the replies Tech2 :beer:
    If Carling made web-sites this would proberly be the best website in the world :T

    Get your SOA done here.... http://www.makesenseofcards.co.uk/soacalc.html
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
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    stephane wrote: »
    Have you looked at your credit agreement? They are probably right....very often you start paying the interest then the car itself. Can you complain...well not really, for what reason?


    this is simply not so; no loans pay off the interest first and then the loan capital


    the simple facts are
    if you have 1000 to pay
    over 6 months
    at say 20% APR
    then the interest would be £54

    so you can't really expect to save more than 54 by paying today can you?

    it really is as simple as that; need to teach this arthimetic stuff at school
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