Motor Loan

MrWenger1982

Hi,
I am looking to buy a car for 10K. I can currently afford to put 4K towards so I need a loan of 6K. My income is 30K per year roughly. I have no current debts to clear or other loans out. I would be looking to pay it off ASAP but don't want to put myself under undue pressure to do so. My ideal situation would be to take out a 2 year loan (smaller repayments mean less pressure) but pay it back in a year. Do banks penalise for this or does it depend on the bank?

Are banks generally better for motor loans or should I look at credit unions? Any advice is appreciated. Thanks

kluivert

banks do not penalise for early settlement of a loan account.

Unless its a fixed rate mortgage.

is_that_so

2 years will put you under pressure. No harm in pushing it to 3 or more. All the bank wants to know is can you repay it. They calculate the total cost of the laon when you apply. You don't pay less by doing it over a shorter period or clearing it early. This is not a mortgage. You sign a contact to pay back so much at the beginning.

With the credit union as along as you match the minimum savings period you can apply for a loan.
TBH what you are asking for they will say yes to almost instantly. Like Kluivert says fixed loan is the only one that will be penalised for, but with interest rates expected to go up this year you might want to balance fixed v variable. Even so for such a small loan it will not make a difference.

BTW unless you need to , do not take the protection - it's just an excuse for banks to make more money.
As regards clearing it early you can pay all of it off or a pay a chunk of it. If you pay a chunk it will not reduce your repayments just the number of them.

Look at BOI for car loans- good rates.

Good luck

MrWenger1982

Thanks guys. I think I will stick with 2 years as I have calculated my average spending and should easily be able to afford it. I also have a backup money available for an emergency though I don't expect to have to use it. Thanks!

byte

I'm in the same process myself.

When I asked AIB about lump sums, they said I can pay a lump sum, but only if it pays the remainder of the loan in full. Which is kind of annoying, as I would like the ability to pay off a bigger amount at times I'm better off, so to finish the term earlier.

With a loan of 6k, with AIB I'd need to pay 311eur per month for 24months. I rang Hibernian Direct on Friday, and they say I'd be paying just over 270eur per month for 24 months which over 2 years, is a massive difference! (for the record, the AIB repayments include PPP, don't know if the Hib one does).

Hibs have to get back to me on Monday though. Will have to find out about lump sum payments then.

is_that_so

I'd say the Hibernian one doesn't. Check out BOI. I have had a number of loans with them and they let you choose whether you want the PPP or not. And you can use lump sum payments to reduce a variable loan. If your loan is less than 3 years then don't do the PPP. Any bank that suggests you have to include a PPP is not worth doing business with.

BuffyBot

They normall all *recommend* PPP, but should also advise you that it is optional, and refusing will not affect the outcome of your loan application.