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      01-07-2013, 01:30 PM   #10
djgandy's Avatar

Drives: E93 M3
Join Date: Aug 2012
Location: London

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2011 M3  [0.00]
Also beware, car finance is a minefield and they always sell it to you in the most complicated incomprehensible way possible. Ask them to give you any details in mortgage style figures. This takes them a while because they use annoying flat rate interest for calculations instead of APR. Also you don't want front loaded (PCP is this I think) as basically they get your loan, calculate the interest and then you start with that figure and repay it. So if you had a 10k loan for 1 year @ 20% your opening balance is 12k and early repayment has no benefit as interest is not recalculated over the period of the loan.

And then you have rule of 78s style loans which basically mean your first payments are paying mostly interest. So after about a year all that is left is principal and it also becomes pointless to pay off the loan as you have already paid all the interest.