Paying off car finance
Discussion
One of the girls at work wants to trade her Mini in for Audi A1. It does depend on the maths.
She's had the Mini for 3 years on a 4 year HP deal. It was only a small deposit upfront on her deal and the rest spread over the 48 months.
The sensible thing is obviously to phone the finance company, but she's not too keen on doing that at the minute. She want a rough idea how much equity she has in her car to make it affordable for her.
I'm not used to finance, so I'm unsure of the workings of HP. I remember years ago the agreements were very heavy with interest in the early years, then nearly all covering the car later in the agreement.
I've been told the law is now the interest has to be spread equally over the loan period?
Is it just a simple case of deducting 25% of the total interest from the 12 months payments that are still to be made?
Can they impose any other charges?
She's had the Mini for 3 years on a 4 year HP deal. It was only a small deposit upfront on her deal and the rest spread over the 48 months.
The sensible thing is obviously to phone the finance company, but she's not too keen on doing that at the minute. She want a rough idea how much equity she has in her car to make it affordable for her.
I'm not used to finance, so I'm unsure of the workings of HP. I remember years ago the agreements were very heavy with interest in the early years, then nearly all covering the car later in the agreement.
I've been told the law is now the interest has to be spread equally over the loan period?
Is it just a simple case of deducting 25% of the total interest from the 12 months payments that are still to be made?
Can they impose any other charges?
Driver101 said:
One of the girls at work wants to trade her Mini in for Audi A1. It does depend on the maths.
She's had the Mini for 3 years on a 4 year HP deal. It was only a small deposit upfront on her deal and the rest spread over the 48 months.
The sensible thing is obviously to phone the finance company, but she's not too keen on doing that at the minute. She want a rough idea how much equity she has in her car to make it affordable for her.
I'm not used to finance, so I'm unsure of the workings of HP. I remember years ago the agreements were very heavy with interest in the early years, then nearly all covering the car later in the agreement.
I've been told the law is now the interest has to be spread equally over the loan period?
Is it just a simple case of deducting 25% of the total interest from the 12 months payments that are still to be made?
Can they impose any other charges?
Why doesn't she just call the finance company? I know you said she doesn't want to but it's by far the easiest way rather than others second guessing the T&C's of the particular agreement she's taken out....She's had the Mini for 3 years on a 4 year HP deal. It was only a small deposit upfront on her deal and the rest spread over the 48 months.
The sensible thing is obviously to phone the finance company, but she's not too keen on doing that at the minute. She want a rough idea how much equity she has in her car to make it affordable for her.
I'm not used to finance, so I'm unsure of the workings of HP. I remember years ago the agreements were very heavy with interest in the early years, then nearly all covering the car later in the agreement.
I've been told the law is now the interest has to be spread equally over the loan period?
Is it just a simple case of deducting 25% of the total interest from the 12 months payments that are still to be made?
Can they impose any other charges?
Sarnie said:
Why doesn't she just call the finance company? I know you said she doesn't want to but it's by far the easiest way rather than others second guessing the T&C's of the particular agreement she's taken out....
It is the obvious solution. She asked me the question and I was curious about the situation about how the interest is spread these days as well.
Her Mini cost a fair few quid, so if the interest is spread equally over 48 months and not top heavy like remember HP to be, there will be a considerable difference in settlement figures.
It was more to see if this is the case just to get a rough figure where she stands.
Driver101 said:
I've been told the law is now the interest has to be spread equally over the loan period?
Is it just a simple case of deducting 25% of the total interest from the 12 months payments that are still to be made?
No this isn't correct. She can call the finance company and request a settlement figure at any time. Assuming the agreement is in an individual's name then the agreement will be regulated by the consumer credit act and the finance company will adhere to a specific formula when calculating the settlement figure. It's very simple and straight forward for her to get the settlement and won't have any effect on whether she decides to change vehicles or not.Is it just a simple case of deducting 25% of the total interest from the 12 months payments that are still to be made?
CRB14 said:
Can I just hijack for a quick second?
With the 50% rule of PCP does the initial deposit come into consideration? I'm considering doing this on my car. Half of the total is £15,800. I've paid £3k deposit plus a further £14k ish of monthly payments - so £17k.
Yes. But remember to include the final balloon payment. Most PCP schemes half way point tend to be near the end of the agreement due to last rather large payment.With the 50% rule of PCP does the initial deposit come into consideration? I'm considering doing this on my car. Half of the total is £15,800. I've paid £3k deposit plus a further £14k ish of monthly payments - so £17k.
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