Sainsburys Loans - Need to ask about overpaying to bring down the repayment time

[DJMK4]

Hi,

I am looking to get a Sainsburys loan, I have asked this question before on the forum, and before anyone says (speak with Sainsburys Finance) I have, however they wasnt very clear (and I spoke with them a few times)

I am looking to get out a £5k loan, to purchase a new car, this will primaraly be a 24 month (2 year) loan.

However, after purchasing the car, I will be straight away selling my current car (for around £1.1-£1.2k), I will also have another £1k saved up, so a total of £2.1-2.2k

I would straight away, like to make a lump sum payment back on the loan, bringing down the total amount needing to repay to be £2.9k

I have spoken with Sainsburys to confirm if lump sum repayments are allowed, they confirmed it however they started going on about 1/4 repayments, 1/2 repayments, 3/4 repayments, and started going on about % charges of the total amount.

As im not clued up on loans, this was very unclear to me.

Im laymen's terms, I need to know if I can make "overpayments" or lump sum payments in addition to the monthly direct debit that will come out my bank, primaraly to bring down the time it takes to repay the loan? will there be any charges?

I have spoken to a few advisors at Sainsburys, and no one could give me a straight answer.


Thanks all

 

[Locky]

Stick to the repayments they ask, keep the 2k in the bank

or sell car first and buy a better car for 7k

 

[DJMK4]

Stick to the repayments they ask, keep the 2k in the bank

or sell car first and buy a better car for 7k

Id rather not keep the 2k, I would prefer to put it back on the loan asap through lump sum repayment.

With interest rates at what they are, its not going to be worth keeping it in the bank, also, it will just tempt me to spend it.

Selling the car first is also not an option, as I would be left with no car to do a 60 mile a day commute with

 

[Sp00n]

Companies don't like overpayments because it means they are getting less interest out of you, I find it to believe that nobody could give you a straight answer!

 

[DJMK4]

Companies don't like overpayments because it means they are getting less interest out of you, I find it to believe that nobody could give you a straight answer!

Well

A) They were going on about 1/4 payments, 1/2 payments, 3/4 payments, when I asked them to clearly explain what this actually meant they said they couldnt really as they couldnt give me an example of how it would work.

B) I asked about charges, again they couldnt give me an answer because they couldnt give me any examples on how it would work until I made the application.

 

[Sp00n]

Sounds like they were reading from a script, I'm not informed enough to give you an answer but I know for instance that my other half has a loan and she can't start doing larger repayments until a certain period.

If nobody can give you a straight answer on here then moneysavingexpert.com have an excellent forum with good advice

 

[fini]

As you only really need £2.9k have you spoken to your bank to see what other solutions they can offer. The two that immediately jump to mind are:
1) Tesco 0% purchases for 13 months card - you also get clubcard points on your purchases! - you could then move this to a balance transfer card at the end of the 13 months
2) Seeing if your bank will increase your overdraft to around £4k to give you headroom and then live in your overdraft until it's paid off.

 

[DJMK4]

As you only really need £2.9k have you spoken to your bank to see what other solutions they can offer. The two that immediately jump to mind are:
1) Tesco 0% purchases for 13 months card - you also get clubcard points on your purchases! - you could then move this to a balance transfer card at the end of the 13 months
2) Seeing if your bank will increase your overdraft to around £4k to give you headroom and then live in your overdraft until it's paid off.

Again bank I would rather not go down, it works out a lot more expensive and has higher rates than someone like Sainsburys Finance does, which is why I chose Sainsburys as they have one of the best rates around.

I need £5k so I have upfront funds to purchase a car, at the moment I only have £1k saved, the loan will be £5k, I can then purchase the new car, only then can I sell my old car and put a lump sum repayment back on loan.

 

[fini]

What about the Tesco 0% credit card solution then? It's going to be much much cheaper than a loan.

 

[DJMK4]

What about the Tesco 0% credit card solution then? It's going to be much much cheaper than a loan.

I will have a look, depending on how long its 0% for, and also what the credit limit is.

I would need a £4k limit which I doubt the card will offer

Reason I would rather get a loan, is that its a contractual agreement, the repayments come straight out of your bank, and you cant re-use the funds, a credit card, I can repay back to it, then re-use the card, even if I cut up the card, I can order another one.

Credit cards are a bad move for me from previous experience.

 

[fini]

I will have a look, depending on how long its 0% for, and also what the credit limit is.

I would need a £4k limit which I doubt the card will offer

13 months and then just move to a 0% balance transfer card if you need longer. How much they'll offer you is entirely dependant on your credit history.

 

[footman]

In your previous post on this subject I replied:
"Sainsburys will allow you to overpay any particular month if you have extra funds.
It won't affect your fixed monthly amount but it will reduce the term of the loan.

I've just spoken to an advisor."

I had a very clear conversation with 2 advisors one of whom was obviously a more senior manager.
Perhaps if you wrote or emailed them you would get an answer that was clearer to you.

 

[DJMK4]

In your previous post on this subject I replied:
"Sainsburys will allow you to overpay any particular month if you have extra funds.
It won't affect your fixed monthly amount but it will reduce the term of the loan.

I've just spoken to an advisor."

I had a very clear conversation with 2 advisors one of whom was obviously a more senior manager.

Cool

Thanks, I clearly got confused by the guy going on about 1/4 payments, 1/2 payments, 3/4 payments, do you know what he meant by this?

 

[Vampyre]

What about the Tesco 0% credit card solution then? It's going to be much much cheaper than a loan.

IIRC, a lot of places won't take a credit card payment for a car.


As far as I'm aware the 1/4 etc they are talking about means that you can only resettle the loan 1/4, 1/2, or 3/4 of the way through the term of the loan and normally they charge you a couple of months interest for the privilege.

 

[DJMK4]

IIRC, a lot of places won't take a credit card payment for a car.


As far as I'm aware the 1/4 etc they are talking about means that you can only resettle the loan 1/4, 1/2, or 3/4 of the way through the term of the loan and normally they charge you a couple of months interest for the privilege.

Cool thanks, looking at my finances, If I take out the two year option, im probably looking at either clearing after half the term (1 year) or 3/4 of the term.

 

[fini]

IIRC, a lot of places won't take a credit card payment for a car.

Really? Never heard of anyone not accepting credit card for car purchases. Indeed, a friend of the family put a ~£30k second-hand Porsche on a credit card a few years ago (he paid off the card in full at the end of each month)!

 

[Bleek]

Some financiers don't allow early payment, but if they do then they'll charge you typically 1-3 months interest worked out on the outstanding loan. Interest is only calculated on the total for the first payment, it's calculated on the balance for each month thereafter.

You need to know when 'overpaying' the requirement if the loan provider reduces the term or reduces the monthly payment. Some other both options.

Personally I'd reduce the term, so you continue to pay the same amount each month as you originally planned when you took out the loan but you pay less interest and close the loan off early.

Here's a good calculator - http://money.guardian.co.uk/calculator/form/0,,603119,00.html

Scenario A:
£5k over 24 months / £224.77 per month / total interest paid £394.50

Scenario B:
£5k over 2 month / 2 payments of 224.77 / interest £60
Sale of car, deposit ~1k
£3.5k over 22 months / 16 payments of 239.30 per month / total interest for 24 month term £186+60

Saving = ~£150
Term reduced by 6 months (total loan 18 months)

So obviously scenario B is easily better, by not spending the money of the car sale, paying off some of the loan early AND reducing the term you win with less interest and 6 months less payments.


(all this is void if you can get a 0% credit card with the appropriate credit limit)

 

[footman]

Really? Never heard of anyone not accepting credit card for car purchases. Indeed, a friend of the family put a ~£30k second-hand Porsche on a credit card a few years ago (he paid off the card in full at the end of each month)!

You will probably get charged a surcharge though, something like an extra 2.5%.

I've had no trouble paying in full for a car with a debit card.

 

[Vampyre]

Really? Never heard of anyone not accepting credit card for car purchases. Indeed, a friend of the family put a ~£30k second-hand Porsche on a credit card a few years ago (he paid off the card in full at the end of each month)!

I've no doubt some do, and I'd be lying if I said I could remember where I heard it, it was something about the chargeback capabilities of a credit card. Maybe it's only disreputable dealers that won't take them in case they are selling you a lemon

 

[DJMK4]

I have just applied for a Tesco 0% credit card for 13 months

Credit Limit £2k however it CAN be raised

Brillo Pad

Time to shop for some cars, combined with my savings I should have around £4.5-5k