Part Payment of Audi Finance

[RMJ891]

I just made a part payment of £1,000 onto my Audi PCP package for my S1. This reduced the amount of interest I'd be paying, and shortened the deal by 3 months. I had been putting the money aside for the next deposit on whatever I get, and figured it'd be put to better use by saving interest.

However, the GMFV went DOWN by £270, despite the fact that they're guaranteeing the value of the car when it is 3 months newer than they were guaranteeing it before. Why does this happen?!

Also, what are people's thoughts on partial payments, i.e. whether they are worth it? I would obviously need cash in hand to pay the next deposit, but I guess I'll get my payment back when it comes to selling.

 

[Scottien]

How did this shorten the deal? Surely it would just reduce your monthly as you're paying more in advance? When I bought my car I only put £4k down as a deposit, then a week later when my insurance payout came through I put another £3k down all this did was reduce my monthlies down.

The reason the value went down is probably because it has updated the deal at this point at the estimated value at this current time for what the car WILL be worth is now £270 less than when you took the agreement out.

Not sure but your best point of call is to talk to VWFS themselves about this.

 

[Bainie]

Reducing the time will reduce the interest , if you reduce your monthly payments then you will still pay the interest over the whole term so be no better off. Or that's the way I would think it works ?

 

[Scottien]

Reducing the time will reduce the interest , if you reduce your monthly payments then you will still pay the interest over the whole term so be no better off. Or that's the way I would think it works ?

Yeh that's probably why the agreed value has changed because you've changed the agreement itself. All I did was make an overpayment so that I brought my monthlies down a bit.

 

[RMJ891]

Yup it's saving me £450 interest over the remainder of the term. I pointed it out to the Audi Finance guy and he said "oh I've never thought of it that way"... which is strange! Hey ho, a saving is a saving, but it just seems a bit tight!

Trouble is, it looks like I may be tied to the GMFV - I thought I'd have a bunch of equity after about 2 years, but the things don't seem to be selling at a very good price!

 

[RMJ891]

Oh and by the way - you have 2 options with overpayments: reduce the term or reduce the monthlies. I chose the former to make in interest saving.

 

[DTYME83]

If you over pay you can either reduce your monthly payment, which will shorten the term or send the money towards the final payment.
DTYME83

 

[RMJ891]

No, reducing the monthly payment does not shorten the term. Say for instance you owe £10,000 in 10 months (£1,000 per month), and make an overpayment of £1,000.

Option 1 means you now owe £9,000 in 10 months (£900 per month), so the term stays the same, but the payments are reduced.

Option 2 means you now owe £9,000 in 9 months (£1,000 per month), so the term is reduced but the payments stay the same.

I took the latter (though with different figures, obviously.

 

[matthewh]

Not quite, two elements here, (cost-deposit)-gfv as a repayment loan, gfv interest only loan. So if gfv stays the same, extra payment reduces monthly on repayment element.

I have found the calculators at www.pcpexpert.co.uk good for playing around with this sort of thing.