Avoid Fee for Pay off Debt Sooner

gozyla86 on 27/04/2020 - 15:21
Last edited 27/04/2020 - 16:10 by 1 other user

Hi,

I have a $65k car loan with Esanda since October 2016, the interest rate is 11.99%, the loan period is 7 years till 2024. I made extra pay last years and now down to $7245.

I called them to ask for a payout figure and they told me it will be nearly $7900 to payout early. I negotiated and got it down to $7500, verbal agreement. So I have to pay an extra $255.

However, one of my friends suggested to me that I can just pay them $7244, and leave $1. They will automatically close my account. She claims that she did it twice in he past.

Anyone have any experiences something like my friend said? Will there any consequence? Or what do you think between 2 way?

Thank you

Financial

Comments

  • 87percent on 27/04/2020 - 15:27
    +2

    that sounds like one of those urban legends like the "paying extra on speeding fines" and then you get a cheque refund and until you cash it, you don't lose demerit points

    but if you're going to pay off your loan, i would be getting any negotiations in writing

    • gozyla86 on 27/04/2020 - 16:07

      I actually call twice last week and today to confirm it. And they got the recorded audio of our call too. I asked for the written confirmation but both of the time they said they are not really doing it on paper. I just have to pay 7500 and they will waive the remaining in 3 days

  • Skramit on 27/04/2020 - 15:35
    +12

    12% over 7 years….jesus!

    What sort of car was it?

    • bloom on 27/04/2020 - 15:39
      +14

      High yield on wheels

      • bdl on 27/04/2020 - 15:51
        +5

        "Yields on wheels"

    • brad1-8tsi on 27/04/2020 - 15:47
      +2

      That was my reaction followed by "I hope it was a deductable business expense"

      • Skramit on 27/04/2020 - 15:48
        +4

        I've just got this mental image of OP walking into a dealership and them offering a special rate of 12% over 7 years down from their standard 19%. Bargain!

        • brad1-8tsi on 27/04/2020 - 15:50
          +3

          I also chuckled that he was concerned about the break fee when he's paid a boatload already

          • Skramit on 27/04/2020 - 15:51
            +2

            @brad1-8tsi: Yes I was going to respond about $255 on a $65k loan - who cares….. but this is OzB where cents count.

            • bloom on 27/04/2020 - 15:55
              +3

              @Skramit: Maybe he thought it was like interest on savings and negotiated in the wrong direction
              Dealer “we have a special finance rate of 6.99%”
              Buyer “make it 12% and I’ll sign today!”

            • gozyla86 on 27/04/2020 - 18:29
              +7

              @Skramit: So what wrong with that if I try to save money now? I made mistake in the past and it is what it is. If you can't answers, just get lost and be keyboard warrior somewhere else

              • Skramit on 28/04/2020 - 11:59
                +1

                @gozyla86: Nothing. Good work.

                But you posted it on a public forum, where we are entitled to laugh if applicable.

        • wittyusername on 27/04/2020 - 16:00

          I've never financed from a dealership, what is a standard rate?

          I just had a look at that and OP would have paid nearly $100k over the course of his loan, assuming $0 fees!

          • Skramit on 27/04/2020 - 16:18
            +2

            @wittyusername:

            I've never financed from a dealership, what is a standard rate?

            I dont think theres such a thing as a standard rate for car loans.

            It depends on so many variables, and I'm not expert, but when I sought vehicle finance last year I was quoted everywhere between 5% and 9% based on my specifics. Dealers are the ones that usually do the whole 0% finance or 1% finance specials, but the catch to those 0% sales is you cant usually move on the car price and usually pay RRP or close to it.

            Ended up financing my car with my existing home loan facility at ~3% but I'm making car repayments as if it's a 4 year loan :)

    • Caped Baldy on 27/04/2020 - 16:28
      +5

      OP needs to hand back their ozb card immediately.

      • Skramit on 27/04/2020 - 17:16

        Heh

  • EightImmortals on 27/04/2020 - 15:52

    Pay it down but leave $100 in there, that way you avoid the ridiculous early closure fees and you'll have the peace of mind knowing you are debt free. There's no better feeling.

    • spackbace on 27/04/2020 - 16:43
      +6

      Unless there's monthly fees…

      • EightImmortals on 27/04/2020 - 17:19

        Is that a thing? And wouldn't they be based on the outstanding balance?

  • [Deactivated] on 27/04/2020 - 15:57

    Your mileage may vary, but I remember getting an Esanda car loan paid off to under $100 then the next thing was getting a surprise loan completion mail. All I was trying to do was extend payment by a month to reduce penalties, so I was happy.

    • gozyla86 on 27/04/2020 - 16:16

      You paying the remaining figure or the payout figure?

      • [Deactivated] on 27/04/2020 - 16:32

        Remaining figure. I thought there would be extra early payout penalties but they didn't come.

  • Muzeeb on 27/04/2020 - 16:02

    Correct me if I'm wrong but there is no advantage to paying off a car loan quicker as all the interest is calculated at the commencement of the loan.

    Eg $65k for car plus $10k interest
    Equals $75k divided by 84 months
    Equals $894 per month

    *figures are just for demonstration purposes

    • Skramit on 27/04/2020 - 16:12

      Yes thats my unstanding for most car loans. They get you on the interest regardless by calculating it up-front.

  • [Deactivated] on 27/04/2020 - 16:27
    +2

    I have a $65k car loan with Esanda since October 2016, the interest rate is 11.99%, the loan period is 7 years till 2024

    Wait, what?! You're basically driving a Hyundai SUV but paying for a Porsche one. Who looks at that and think it's a good deal?

    • Muzeeb on 27/04/2020 - 16:32

      Lol. It's probably your friends neighbour 😁

      • [Deactivated] on 27/04/2020 - 16:34
        -2

        Nah. If it was my friend , I would unfriend them stat.

    • gozyla86 on 27/04/2020 - 18:26

      I am not asking that. Can you know how to read?

      • [Deactivated] on 27/04/2020 - 18:44
        +5

        Can you know how to read?

        Yes, I "can" know how to read.

        To answer your questions:

        Anyone have any experiences something like my friend said?

        Nope.

        Will there any consequence?

        Who knows. It may affect your credit rating.

        Or what do you think between 2 way?

        I would email them something along the lines of " As per our conversation on [date, time], this [ insert the offer that was made to you over the phone ] was agreed upon. Please confirm so that I may proceed with the payment.

        If they reply to your email , pay them . If they refuse to reply, you know they are not serious about the offer and pay them what you owe them.

        • gozyla86 on 27/04/2020 - 19:38

          Thanks you

  • Caped Baldy on 27/04/2020 - 16:30
    +3

    You're concerned about paying an extra $255 despite entering a 12% pa contract???

  • spackbace on 27/04/2020 - 16:45
    +6

    Not this car I gather…

    Ohh poor bastard getting 12% on a Jeep 🙁

    • Muzeeb on 27/04/2020 - 17:01

      hope it will do me one last favour to score a good value when I put it on-sale.

    • tight-ass on 27/04/2020 - 17:17

      High yield Jeep maybe?

    • gozyla86 on 27/04/2020 - 18:27
      +1

      So what is the problem if it is? Can't people make finance mistake?

      • boratthegreat on 28/04/2020 - 08:45

        Of course people make finance mistakes but 12% interest on a Hyundai van is just ridiculous 😂 You should be ashamed of yourself! Now pay your debt and get another Hyundai Van!

    • Zachary on 28/04/2020 - 19:48
      +1

      I lost everything and bring with me around 13k CC debt and 50k Car loan. I was kicked out of the house and was living in my car until last few weeks. I have an injury that prevents me to work, I am under WorkCover compensation.

      Press F for respects.

      The car's now worth about 36k: https://www.carsguide.com.au/jeep/wrangler/price/2016 if he were to try and sell it today….

      • gozyla86 on 29/04/2020 - 19:29

        I paid it all off. This is the last bit.

        • Zachary on 29/04/2020 - 23:22

          Oh, that's good news!

  • saltypete on 28/04/2020 - 10:03
    +1

    I think you need to read your loan agreement VERY CAREFULLY. This will cover what you want to do. None of us here will have any real idea as we do not have that legal document in front of us. While this can be tedious, you need to do it, and perhaps could have spent time doing this before you signed it. If there are bits that you don’t understand (few of us are fluent in legal gibberish) there are groups around that can help for free (legal aid ) or if you have a specific question perhaps call Esanda.
    You need to do this for 2 reasons.
    Make the best financial decision four your situation, and
    Learn so that you make better decisions in future.
    I say this because you are clearly hard working and want to keep financial costs to a minimum. With your situation you probably now realise that you could have saved a lot of money if you were more knowledgeable in 2016. You main financial asset is between your ears and you need to learn. Start getting this knowledge. Now….

    • gozyla86 on 29/04/2020 - 19:29

      Thank Saltypete.

  • ozbjunkie on 28/04/2020 - 23:46

    I think OP's interest rate reflects a simplistic understanding of the phrase "you have to spend money to make money".

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