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  • FIRST POST
    • Zola.
    • By Zola. 26th Feb 18, 11:43 AM
    • 1,249Posts
    • 503Thanks
    Zola.
    Paying off the wheels - 3 year debt into 1
    • #1
    • 26th Feb 18, 11:43 AM
    Paying off the wheels - 3 year debt into 1 26th Feb 18 at 11:43 AM
    Just before Christmas we bought a fairly new car. Our last car was worn out, 12 years old.. The new car price was £14,500.

    We paid half up front and took out a private bank loan for the remaining balance over 3 years. The APR is 3.44%, which is higher than our mortgage rate, but significantly better than car dealers finance option (10%!!!).

    I log in to my banking app most days, and I absolutely hate seeing the figure going up a pound or two every day or so!! We have since had a complete turnaround in personal ethos with regards to all consumer debt, now totally against it and have promised ourselves never to do it again. Other than student loans, and a mortgage, and a few hundred quid on a sofa, these are all of our debts.

    So this blog is all about clearing that car debt as quickly as possible. We have the money in savings and investments, but we don't want to deplete those to pay this off now, we are attacking it via overpayments from income etc. Tightening the belt, basically! I am targeting a one year pay off as this wont affect our monthly investing plans and everything else, the sofa will be finished around then too. It was a 0% APR one from D*S...

    Starting debt was around £7500. We have paid 3 regular payments so far, and made an overpayment of £1200 from savings to get the ball rolling.


    December 2017 - Circa £7500
    January 2018 - £6920
    February 2018 - £5720
    Last edited by Zola.; 26-02-2018 at 11:52 AM.
Page 1
    • EssexHebridean
    • By EssexHebridean 26th Feb 18, 12:53 PM
    • 8,717 Posts
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    EssexHebridean
    • #2
    • 26th Feb 18, 12:53 PM
    • #2
    • 26th Feb 18, 12:53 PM
    You're starting from almost exactly where I did a few years back! It's a good mindset to get into, and it is amazing how much of an impact you can make quite fast when you put your mind to it! Mine should have been 30 months (from memory) and I got shot of it in 13 months I think. As soon as it was gone we were driven to carry on and start overpaying our mortgage too!

    Good luck - remember that making small changes can make a huge difference!
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£982.19 (04/06/18)
    SOA Calculator for DFW newbies: Stoozing.com SOA Calculator
    • missplant
    • By missplant 26th Feb 18, 1:31 PM
    • 10 Posts
    • 23 Thanks
    missplant
    • #3
    • 26th Feb 18, 1:31 PM
    • #3
    • 26th Feb 18, 1:31 PM
    good luck with your car mission!
    • Zola.
    • By Zola. 26th Feb 18, 2:51 PM
    • 1,249 Posts
    • 503 Thanks
    Zola.
    • #4
    • 26th Feb 18, 2:51 PM
    • #4
    • 26th Feb 18, 2:51 PM
    You're starting from almost exactly where I did a few years back! It's a good mindset to get into, and it is amazing how much of an impact you can make quite fast when you put your mind to it! Mine should have been 30 months (from memory) and I got shot of it in 13 months I think. As soon as it was gone we were driven to carry on and start overpaying our mortgage too!

    Good luck - remember that making small changes can make a huge difference!
    Originally posted by EssexHebridean
    Thanks! We already overpay on the mortgage when possible, but the car is definitely number one priority now.

    Consumer debt sucks, I am glad I have done this now to know what its like. I am borrowing from my future time, so I need to not let it happen again!
    • EssexHebridean
    • By EssexHebridean 27th Feb 18, 12:02 PM
    • 8,717 Posts
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    EssexHebridean
    • #5
    • 27th Feb 18, 12:02 PM
    • #5
    • 27th Feb 18, 12:02 PM
    Trust me - when you reach the point that your cars are your own, your mortgage is paid off, and you have enough in the bank to replace a car if needed it really is a great feeling. Well worth all the work to get there!

    Something else to remember on this - you're already made some really sensible decisions around this. The debt you chose to take on is "good debt" in that it was for transport that you needed, not something like a holiday that you just wanted. You also made a good choice to get a bank loan rather than HP or the dreaded PCP finance - meaning that the car is "yours" right from the start. And you shopped around for a good rate too. To add to that you paid half the cost of the car upfront from savings as well. If I was going to pick out one thing then I'd say that you possibly should ideally have just bought a car with the savings at a lower value. That's one to take forwards for the future I'd suggest.
    Last edited by EssexHebridean; 27-02-2018 at 12:07 PM.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£982.19 (04/06/18)
    SOA Calculator for DFW newbies: Stoozing.com SOA Calculator
    • Zola.
    • By Zola. 28th Feb 18, 1:57 PM
    • 1,249 Posts
    • 503 Thanks
    Zola.
    • #6
    • 28th Feb 18, 1:57 PM
    • #6
    • 28th Feb 18, 1:57 PM
    Indeed, we are a long way off the mortgage, but will keep chipping away at it.

    We love the new car, it is a bit of an indulgence, but hopefully it lasts as long as the other VW I am still driving today, its 15 years old! 239,000 miles on the clock haha. Driving it into the ground!

    We had been doing £350 a month into a mortgage overpayment account, I may start plonking that into the car payments each month now, would get it done even quicker
    • Zola.
    • By Zola. 2nd Mar 18, 8:51 AM
    • 1,249 Posts
    • 503 Thanks
    Zola.
    • #7
    • 2nd Mar 18, 8:51 AM
    • #7
    • 2nd Mar 18, 8:51 AM
    Regular payment out this morning of £219, takes the bill down to £5504.
    • enthusiasticsaver
    • By enthusiasticsaver 2nd Mar 18, 10:07 AM
    • 6,605 Posts
    • 13,839 Thanks
    enthusiasticsaver
    • #8
    • 2nd Mar 18, 10:07 AM
    • #8
    • 2nd Mar 18, 10:07 AM
    Well done on tackling this. We hate consumer debt too but borrowing for a car or an asset (albeit a depreciating one) is the least worst debt if that makes sense. If your car loan interest rate is higher than your mortgage it is better to get rid of that first then tackle overpaying the mortgage. Make sure it is not more cost effective though to direct overpayments into your pensions.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Zola.
    • By Zola. 9th Mar 18, 2:13 PM
    • 1,249 Posts
    • 503 Thanks
    Zola.
    • #9
    • 9th Mar 18, 2:13 PM
    • #9
    • 9th Mar 18, 2:13 PM
    I received a share on an inheritance from a family member.

    I used some of this to pay off an extra lump sum today of £1500

    Taking the car debt down to £4007
    Last edited by Zola.; 09-03-2018 at 3:10 PM.
    • Zola.
    • By Zola. 29th Mar 18, 11:39 AM
    • 1,249 Posts
    • 503 Thanks
    Zola.
    Another £500 overpayment made yesterday. Remaining debt down to £3515, with the regular payment due to come out on the 1st April.
    • LittleMissKitty
    • By LittleMissKitty 29th Mar 18, 5:29 PM
    • 389 Posts
    • 669 Thanks
    LittleMissKitty
    Good luck, not that you appear to need it you're doing amazingly well!
    DFD 22/7/14
    OD £1200 ~ CC1 £1875 ~ CC2 £1275 ~ Tesco £4757 ~ Creation £235 ~ FIL £25750
    DEBT @ 28/03/2018 = £35092

    • Zola.
    • By Zola. 31st Mar 18, 10:38 AM
    • 1,249 Posts
    • 503 Thanks
    Zola.
    Good luck, not that you appear to need it you're doing amazingly well!
    Originally posted by LittleMissKitty
    Thanks, its going down well so far, hopefully get a few more overpayments soon
    • Plumjam
    • By Plumjam 1st Apr 18, 8:46 AM
    • 53 Posts
    • 108 Thanks
    Plumjam
    Just one thing about PCP - you can sometimes get good deals or extras on your new car by taking out an agreement but there's nothing stopping you from paying it off in full immediately after you pick up your car. I bought a new car last year. The dealer wouldn't give me anything extra for cash but I got a £500 deposit contribution and a 5 year warranty for taking out the PCP agreement. I let one payment go through, got a settlement figure and then paid the rest off - all done online, no conversation needed. Paid about £50 in interest but it was definitely worth it.
    Last edited by Plumjam; 01-04-2018 at 8:49 AM.
    • Fireflyaway
    • By Fireflyaway 1st Apr 18, 3:59 PM
    • 1,808 Posts
    • 1,962 Thanks
    Fireflyaway
    We had planned to save for a car and pay cash but my 12 year old astra gave up before we had saved! Now we plan to do the same as you. There are little charts you can print off where you colour a section in each time you make a payment! Car finance doesn't have to be a fact of life. If you have spare cash it makes perfect sense to do what you are doing and have more cash spare for other things.
    • twisting
    • By twisting 1st Apr 18, 11:44 PM
    • 16 Posts
    • 103 Thanks
    twisting
    Well done! We are working on something similar - I got a settlement figure last week and it's £1631, so we're very close...but I wish I'd seen sense years ago, it's on a shocking 11% APR. We'll be driving it into the ground.
    January grocery challenge £111.35/£400
    • Zola.
    • By Zola. 20th Apr 18, 12:10 PM
    • 1,249 Posts
    • 503 Thanks
    Zola.
    I paid another £1000 to the loan this morning (taken from savings), its now sitting at £2,302. Its going down nicely, but still a pain to see the interest going up everyday!

    I am hopeful of getting a bit of freelance work this weekend which will enable me to either pay more off the loan or else put that back into savings which I have just sent over to the loan account.
    • Zola.
    • By Zola. 3rd May 18, 4:05 PM
    • 1,249 Posts
    • 503 Thanks
    Zola.
    Standard payment came out there on the 1st as normal, and I made a lump sum of £400 after a relatively quiet month!

    Loan now down to £1,685!
    • chelseablue
    • By chelseablue 3rd May 18, 4:47 PM
    • 2,419 Posts
    • 2,889 Thanks
    chelseablue
    Following with interest We had to buy a car in March and took out a loan from Nationwide.

    We do have savings that would more than cover it but that's for our wedding in June and holiday to Australia in December.

    Outstanding loan amount is £5,800 with 4 years to go, interest is 4.5% and the monthly payment is £136

    If only I wasn't getting married I could pay it off tomorrow
    Mortgage starting balance £231,000
    Mortgage after Year 1 £225,000
    Mortgage after Year 2 £218,000
    • Zola.
    • By Zola. 31st May 18, 2:19 PM
    • 1,249 Posts
    • 503 Thanks
    Zola.
    Another £500 overpayment made just now, taking the bill down to £1190

    With tomorrow being the 1st if the month the regular payment of £219 will come out, which will take it down to £971.

    The end is in sight!!
    • Zola.
    • By Zola. 8th Jun 18, 12:12 PM
    • 1,249 Posts
    • 503 Thanks
    Zola.
    Sitting at a figure of £971, hoping to do another overpayment at the end of the month. All being well I can have this cleared by the end of August

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