Overpaying on Toyota Finance

[PAISLEY1903]

Anyone use the Overpayment option on your finance within the finance app.

With pcp rate low vs savings rates its not viable really at moment but I just wondered !

[forkingabout]

I've not seen that option - but then I'm on a 0% PCP agreement.

[philip42h]

I can't see an Overpayment option either, but I have, in the past, requested a settlement figure and settled early ...

[PAISLEY1903]

If click on make payment it gives option to decide if want to reduce term or payment 🙂

[Nick72]

Just thinking about the mortgage by analogy, I made about 11k of overpayment last year onto the mortgage thinking it would come off what I owe. It didn't. It just sits in a buffer in case you can't make a regular payment and so comes out of the buffer. So, surprised, but then again I should have checked. When I remortgage I can convert that buffer to zero, transferring the money onto a new mortgage. 

Not sure how it works on PCP.

[ernieb]

7 hours ago, Nick72 said:

Just thinking about the mortgage by analogy, I made about 11k of overpayment last year onto the mortgage thinking it would come off what I owe. It didn't. It just sits in a buffer in case you can't make a regular payment and so comes out of the buffer. So, surprised, but then again I should have checked. When I remortgage I can convert that buffer to zero, transferring the money onto a new mortgage. 

Not sure how it works on PCP.

Wow, that’s really poor. When I had my mortgage, with a Bank, I could make overpayments and the money would come off the principle immediately. So back in the day when the interest rates were +15% as they went down we tried to keep paying at that rate. It made a massive reduction in the time.

[Nick72]

5 hours ago, ernieb said:

Wow, that’s really poor. When I had my mortgage, with a Bank, I could make overpayments and the money would come off the principle immediately. So back in the day when the interest rates were +15% as they went down we tried to keep paying at that rate. It made a massive reduction in the time.

Yeh I was surprised. I was eagerly paying in thinking I was reducing the cost. A bit naughty I thought. When I remortgage I'll get it knocked off the new mortgage. 

[PAISLEY1903]

23 hours ago, Nick72 said:

Just thinking about the mortgage by analogy, I made about 11k of overpayment last year onto the mortgage thinking it would come off what I owe. It didn't. It just sits in a buffer in case you can't make a regular payment and so comes out of the buffer. So, surprised, but then again I should have checked. When I remortgage I can convert that buffer to zero, transferring the money onto a new mortgage. 

Not sure how it works on PCP.

That's my actual industry.

Was it an offset mortgage?

[Mike2222]

23 hours ago, Nick72 said:

It just sits in a buffer in case you can't make a regular payment and so comes out of the buffer.

That seems like a very atypical mortgage clause, can't say I've heard of that before. Although I don't work in that industry, so sounds like @PAISLEY1903 is likely to be a more accurate reference point on this front.

 

Even an offset should give you options for holding the money against the interest in some way, either by reducing the term or the amount you pay each month the money is held in the offset account (ie payment the same but interest would only be calculated against 289k rather than 300k, for example, so you're effectively overpaying, or reducing the amount you pay each month so that the interest proportion of each monthly payment is reduced but the capital payoff proportion remains the same). 

 

Your scenario sounds more like some kind of playground bully situation, holding onto your cash "for safekeeping", with no benefit to you. Is there a nominal interest rate for this overpayment cash?? Even utility companies are obliged to give interest on credit balances these days

[PAISLEY1903]

6 minutes ago, Mike2222 said:

That seems like a very atypical mortgage clause, can't say I've heard of that before. Although I don't work in that industry, so sounds like @PAISLEY1903 is likely to be a more accurate reference point on this front.

 

Even an offset should give you options for holding the money against the interest in some way, either by reducing the term or the amount you pay each month the money is held in the offset account (ie payment the same but interest would only be calculated against 289k rather than 300k, for example, so you're effectively overpaying, or reducing the amount you pay each month so that the interest proportion of each monthly payment is reduced but the capital payoff proportion remains the same). 

 

Your scenario sounds more like some kind of playground bully situation, holding onto your cash "for safekeeping", with no benefit to you. Is there a nominal interest rate for this overpayment cash?? Even utility companies are obliged to give interest on credit balances these days

Exactly this I don't know of any mortgage lender who would do this unless offset where its simply offsetting against the interest (or a legacy bank that isn't lending now but still should stick to their terms). 

My APR on the ChR is 2.9 , Rav4 is less but that's gone soon.  

I'm one for reducing the term constantly get rid of it as soon as can!  I might overpay £1 just to see how annoyed toyota finance get. 😄

 

 

[GilesC]

13 hours ago, Nick72 said:

Yeh I was surprised. I was eagerly paying in thinking I was reducing the cost. A bit naughty I thought. When I remortgage I'll get it knocked off the new mortgage. 

When I repaid amount early on my mortgage they reduced the amount, but they only recalculate that amount once a year (it's a five year fix). I've seen the TFS repayment options, but can't use it yet as I'm still yet to make the first repayment.

If you have multiple fianace agreements, personal loans, etc etc, they it really makes sense to only repay the highest interest rate ones first.

Only exception is with your mortgage and your current fix is soon going to end and a remortgage is going to take you to a higher rate.

If you want your mortgage repayments to be handled in a certain way then it's best to call 📞 and arrange it (i.e. say you want to make a capital repayment).

[Nick72]

7 hours ago, PAISLEY1903 said:

That's my actual industry.

Was it an offset mortgage?

No idea. More concerned about getting the lowest possible interest rate for as long as possible, which at I think was 2.6% fixed for 5 or I think 6 years was the main driver. 

It was described as overpayment capable provided I didn't put more than 10k a year in. However I didn't look at the details. Interest rate was my main driver at the time. 

It seems the bank dies this option to allow over payment to cover future underpayment. But I might be surprised to discover that somehow it saved me on some interest payments when I come to the end. But it is accounted for separately by the bank. 

 

[Nick72]

6 hours ago, Mike2222 said:

That seems like a very atypical mortgage clause, can't say I've heard of that before. Although I don't work in that industry, so sounds like @PAISLEY1903 is likely to be a more accurate reference point on this front.

 

Even an offset should give you options for holding the money against the interest in some way, either by reducing the term or the amount you pay each month the money is held in the offset account (ie payment the same but interest would only be calculated against 289k rather than 300k, for example, so you're effectively overpaying, or reducing the amount you pay each month so that the interest proportion of each monthly payment is reduced but the capital payoff proportion remains the same). 

 

Your scenario sounds more like some kind of playground bully situation, holding onto your cash "for safekeeping", with no benefit to you. Is there a nominal interest rate for this overpayment cash?? Even utility companies are obliged to give interest on credit balances these days

Or it may have been a means of allowing me to get 2.6% for 5 or 6 years.😉

[GBgraham]

23 hours ago, ernieb said:

Wow, that’s really poor. When I had my mortgage, with a Bank, I could make overpayments and the money would come off the principle immediately. So back in the day when the interest rates were +15% as they went down we tried to keep paying at that rate. It made a massive reduction in the time.

I had one of these offshoot accounts at the 15% times and they were great, pity they didn't do the same on any borrowing.