Alphera HP - v one sided deal?

[Ken Figenus]

Just went to pay off the HP on my car as they wont let me pay an £200 extra per month without manually calling up them up every month with my debit card to hand (and actually remembering to do so). So they give me a settlement figure that is valid till Dec 7th - i.e they don't calculate interest daily and they will charge me another £100 or so in interest on a non existent loan that I was going to pay off today.

They also charge a lot more interest than any personal loan and I don't even get to own my car till the last payment - even though they in fact only own 20% of it!! They also have a first charge on a low LTV asset but charge more interest than personal loans without that asset?!

I've never had HP before but must say I now really prefer the personal loan approach when pushing out the boat!

[PurpleMoonlight]

You should undertake your costs analysis before you choose a finance arrangement, not after.

[Ken Figenus]

Research was done but that seemed the best option to secure the car at the time - even arranged it via a broker to get a better rate rather than via supplying dealer. Having reduced the balance for 1 year better options then opened Mentioning it may save others a few quid - BMW have enough!

[rfoster]

Like all the car finance companies, your agreement (assuming it's in your own name and not a limited company) are bound by the consumer credit act so they have to adhere to a strict formula when they calculate your settlement figure. None of the finance companies offer a 'regulated' variable rate agreement where you only pay interest up to the day that you settle the agreement. You can get an unregulated one from some lenders - but this doesn't mean they won't charge you a fee for early settlement.

The option to pay off additional lump sums early during the agreement only came into force last year, it does make the agreement very flexible if you do want to pay of lumps early. Can't see what the problem is with having to ring them up to pay off a lump sum?

It's also true that the car finance company own your car until you have paid it off in full. The loan is secured against the car, and if you default on your agreement they can only repossess the vehicle (i.e. they can't take your personal possessions.) Again, this is standard practice for all secured finance agreements.

[Ken Figenus]

Thanks Richard - this must be it and I guess a 'regulated variable rate' is the key difference here. It must be more what I'm used to and why I find this HP type setup less favourable. I had a Nationwide personal loan up until recently and it was great as they calculated interest daily and I could make lump sum repayments with one internet banking click. I paid it off 6 months earlier than scheduled :-)

Lots to know about these HP type loans - I was being sold one that was OUTSIDE of the regulations at one point. Oooh, go on Sir, have a brand new model with £25k off! Glad I caught that and resisted! Cheers.