Close a Hire Purchase Plan early

T

Tired Paul

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All,

I'm a few months (7) into a HP plan for a car. Fortunatly a family member has come into some cash and wants to pay off this for me. I'm waiting to hear back from the HP provider but I'm just wondering does anyone know if there are penalties for closing a HP plan early. The amount owing is approx €13,000.
Thanks.
 
I could be corrected here but I believe you will obviously have to pay the initial capital and then the interest as if you completed the agreed length of the HP itself.
So if you borrrowed €10k for the item and over 5 years the interest was €2K,
then I believe you would now have to pay €12k - whatever you have already paid in the last 7 months.
 
Hi Paul

What do you mean by "amount owing" ? Let's assume the following

[/table]Cost of car |€10k
Interest|€4k
Repaid already|€1k
Future repayments due |€13k[/table]

There is nothing to stop you writing a cheque now for €13k - I am sure that they would be delighted. But there is no advantage in paying them €13k now as you will pay the same amount over the next 4 years and 5 months.

They should do a deal with you e.g. accept €11k now, but there is no obligation on them to do so, unless there is provision in the HP agreement to allow for early repayment.

Check the HP agreement you signed. Is there a clause in it which shows how early repayments are treated?

Did you deal through a garage? If so, they usually have influence with the HP provider and might be able to negotiate a better deal for you. However, try yourself further, as the garage might have to refund their commission if the agreement is paid off early.
 
Thanks Brendan, I will approach them and see if they'll do a deal for early payment. I did deal with a garage but I'll try the HP company first.

Thanks, I'll update later.
TP.
 
Closed this HP plan today. Rang them during the weel asked what was due - €12820. I asked if there would be any implications if i settled in full this week. They said they would check and get back to me. A few mintues later they confirmed that if I paid in full there would be no penalties. I asked was there room of negotiation - no. I offered €12500 payment today and they checked, put me on hold, and then they said ok.
I was happy enough with that. Job done.
 
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