Can I end my Hire Purchase agreement early?

[SmartMAC]

I bought a c coupe a few months ago using Mercedes finance. The agreement is for hire purchase without ballon payment.

I might be coming to some money in the near future which I want to use to pay off the finance on the car. Can I do this? How much is Mercedes likely to charge for ending the agreement early?

This is the first car I bought of part-finance so I don't know much about this. I know I can call Mercedes finance, but I would like To be armed with some info before I do.

Thanks.

 

[Peter DLM]

Ask them. But I'd invest the money, you'd yield more than the interest rate that MB are charging you in an appropriate ISA or similar.

Plus, there would be a hefty early settlement fee after only a few months. They front load all the interest.

 

[SmartMAC]

I have done some quick calculations and I am paying over 3K on interest over the 4 years finance period. I think I will struggle to make the same amount of money with and ISA or similar.

 

[Peter DLM]

You're probably paying 4.9%.

I could return that with my eyes closed. Loads of Bonds with yields over that right now. The rule of '78 will soon put you off paying it off so early I think.

 

[LTD]

Get a settlement figure from them and work out the total of all the remaining payments.

The difference is what your lump sum investment would need to achieve in the same time.

You may be surprised.

 

[SmartMAC]

You're probably paying 4.9%.

I could return that with my eyes closed. Loads of Bonds with yields over that right now. The rule of '78 will soon put you off paying it off so early I think.

I am pretty sure is more like 7.9% but I am trying to simplify my life by reducing the amount of money I pay in loans and mortgages so even if the gain is relatively small it might work for me.

 

[renault12ts]

Emm...read the agreement you signed...it's all there.

 

[SmartMAC]

Emm...read the agreement you signed...it's all there.

You would think.
There is just some basic information and it refers you to the Mercedes finance website which tells you to call them.

 

[st4]

You'll see a hefty reduction and one less debt to have us always a good thing.

 

[Shude]

You'll see a hefty reduction and one less debt to have us always a good thing.

Plus the finance "industry" has been heavily leaned-upon in the last few years to reduce or remove early repayment fees as getting people out of debt is to be encouraged.

I think I paid about £100 to get rid of a mortgage, only 4 years into it (plus the remaining balance of course!).

 

[SmartMAC]

Just called Mercedes finance and settlement figure is very good. It doesn't break it down but it is a saving of 3K over the loan term. Definitely considering this as it doesn't appear to have any major penalties fees on it.

 

[Peter DLM]

Sounds like you're getting off lightly, run the figures and see what works out most efficient, though if you're paying 7.9% I'd probably choose to repay the finance.

 

[Deleted member 6183]

Just called Mercedes finance and settlement figure is very good. It doesn't break it down but it is a saving of 3K over the loan term. Definitely considering this as it doesn't appear to have any major penalties fees on it.

There should be a saving, remember that you should not be expected to pay interest on money you no longer owe.
I have a feeling that settlement calculators such as rule of 78 have given way to a simple 2 months penalty interest for most mainstream lenders.

 

[jonnyMercUK]

Personally...I would keep the finance, we all know new cars are money pits and can lose you huge amounts of money UNLESS you run them into the ground.

Are you able to give the car back when the finance finishes?

 

[SmartMAC]

Personally...I would keep the finance, we all know new cars are money pits and can lose you huge amounts of money UNLESS you run them into the ground.

Are you able to give the car back when the finance finishes?

Its hire purchase without balloon payment so just like a normal loan. The car is already mine as it is so I don't need to worry about returning at the end of the agreement. I intend to keep the car for a long time too.

The point here is that the salesman had to reduce the list price on the car because he could not get close to the APR I wanted. He had to do this to meet the monthly figure I was happy with. By repaying the loan now, I should save an extra 3K on the overall cost of the car. )))))))))))

 

[mika]

i took a small part of the price as finance at the request of the salesman
and subsequently paid it off after the first month with no penalties- this was through mercedes perhaps yours is the same
sorry i should add the reason this was offered was to get a further reduction on the purchase price
Im no finance expert but i was told i would be lucky to get 8% discount on a c63 i actually got 16% when all was said and done

 

[jonnyMercUK]

Its hire purchase without balloon payment so just like a normal loan. The car is already mine as it is so I don't need to worry about returning at the end of the agreement. I intend to keep the car for a long time too.

The point here is that the salesman had to reduce the list price on the car because he could not get close to the APR I wanted. He had to do this to meet the monthly figure I was happy with. By repaying the loan now, I should save an extra 3K on the overall cost of the car. )))))))))))

Ah now I understand why you would want to do this, if you do it this way you get a great deal on buying a new car

 

[SmartMAC]

i took a small part of the price as finance at the request of the salesman
and subsequently paid it off after the first month with no penalties- this was through mercedes perhaps yours is the same
sorry i should add the reason this was offered was to get a further reduction on the purchase price
Im no finance expert but i was told i would be lucky to get 8% discount on a c63 i actually got 16% when all was said and done

Excellent. Looks like you have done this on purpose. :bannana:

 

[SmartMAC]

Definitely worth the time it takes to sort it out.

 

[SmartMAC]

Done and dusted. Settled the finance on Thursday last week with a debit card over the phone and got a confirmation letter from MB on Friday. Very easy and straight forward to do and a saving of over 3K in interests. Car is 100% mine now.