Do you still have to pay the interest charges when you pay off your car finance early?
I have a car on finance over 4 years, basically it appears that i have paid for the car in the first two and a half years, and now it must just be the interest. If I wish to pay off the remainder, do I still have to pay the interest on the finance
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June 7th, 2010 at 2:51 am
It depends on the small print of your credit contract
June 7th, 2010 at 2:58 am
Depends on your contract. Pull it out and read it, look for the term, “Prepayment penalty”.
And you have it backwards, you paid the bulk of the interest the first 2 1/2 years, and now your payments are finally going mainly to the principle.
June 7th, 2010 at 3:43 am
No you should get a rebate, best to phone the finace company and ask.
June 7th, 2010 at 4:02 am
i never. ask.
June 7th, 2010 at 4:11 am
You have to pay interest on the term which you have had the loan outstanding so 2 1/2 years interest, you will not have to pay the full amount if you pay it all off early but you may get an early re-payment penalty depending on your finance agreement, you’ll need to read it.
June 7th, 2010 at 5:05 am
I don’t wish to bore with the ‘terms and conditions’ of your financial contract with the company in question, but your terms for repayment was over 4-years and interest was inclusive on your final settlement figure.
Saying that, in the past, I think that an early redemption was dealt with sympathetically, however, financial instututions have been quick to understand and react to their financial loss in these circumstances.
In the case of mortgages, a Lender will instruct a ‘penalty’ for anyone wishing to redeem their mortgage quicker than the 25yrs of payments. Why? Because the Lender will lose costs in all possible increased mortgage rates over that original 25yr payment history.
Yes, I have no doubt that your Lender, under the original terms of contract, will seek the interest payments. Afterall, this is there charge for providing you the loan in the first place.
June 7th, 2010 at 5:08 am
Depending on your contract most companies, don,t charge, but you do get ones that have an early repayment charge, It will tell you on your contract look it out, Good luck
June 7th, 2010 at 6:03 am
To find out for sure, contact the finance company and ask for a settlement figure. While you think you have paid for the car at this stage, they have to make their money somehow, and the interest charged is just that, if you were in their shoes, wouldnt you want to earn something for allowing someone to borrow from you?
June 7th, 2010 at 6:10 am
Generally if you pay anything off early you also save on paying alot of interest. All contracts differ though so simply call your lender and ask them right out. Possibly record their answer as well.
Any lender will be compensated for simply borrowing you money, that just the way it is and it is fair but if you want to save $$ always pay any loan off early and you will save by not having to pay the full amount of interest for the full loan duration.
: )
December 2nd, 2011 at 2:41 pm
Beautiful photo’s of a beautiful couple.