Car financing - making capital payments (Wesbank)

[Polk]

Hi everyone,

Has anyone had any experience making capital reduction payments on their vehicle financing?

So far this is what I've learnt from Wesbank; you can make capital payments by transferring money into your finance account and then sending a form to Wesbank asking them to allocate this money as a capital payment (either reducing monthly payment or term). Once they have this they will reduce the capital and recalculate your interest. If you don't send the form the transferred money will be left unallocated.

On the phone they always recommend saving up a large sum before allocating the money as a capital payment.

My question is, there is no ways I will have the self discipline to save for 6 months and then assign the whole bunch but I'd prefer to do a smaller capital payment every month. Are there any penalties or negatives that I may be over looking in doing this?

They make the whole process quite confusing and painful!

Thanks!

 

[supersunbird]

Just pay it over for 6 months and then have them allocate it to the capital amount after that perhaps?

 

[Polk]

I was thinking of that but then I thought if I get them to recalculate every month surely I would save on interest. If I wait for 6 months I have to pay extra interest while I save up.

Seems like the better option is to do smaller payments every month, if of course there aren't any penalities/draw backs.

 

[RustyPrincess]

I pay additional money into my wesbank account every month.
At the end of the month i have an interest deduction and then a rebate of interest. So I don't think you will loose out if you don't specifically say to them its a capital reduction payment.
And then you can just settle early when you owe almost nothing on the car

 

[Viper25]

Exact same situation as you.
I make extra payments towards the loan, but these extra payments seem to be just
sitting there. When i called them, they said I need to send through all my payment confirmations even though
the extra money reflects on their side. WTF??

 

[USZA]

This is weird guys because I'm also with Wesbank and my Wesbank account is linked to my FNB internet profile. I was told that I can pay that off at any time or pay extra amounts into the account at any time - no need to notify them. Interest would then be calculated on the outstanding balance.

 

[Polk]

It is confusing.

From what I understand from speaking to them when you make a payment into your account it gets placed in the "Advane / Arrears amount" section. From there you have to get them to allocate it.

Guess I'll only really know once I give it a try

 

[poffle]

I put down a big payment on my car and only conversed with them via email. I must say their email support is top notch, but ya in my "Amount in Arrears" i now sit in the minus's . My contract payment was reduced aswell

 

[WesBank]

Good day Polk
A capital reduction is definitely benefical to you, more so earlier in the agreement as opposed to later in the agreement.

Should you wish to pay an amount in advance monthly as a "saving" you can do so. Your account will be in adavnce for these additional payments for which you will earn rebate interest. Rebate interest will be credited to your account increasing the advance amount. Once the advance amount is to your liking we can complete the capital reduction (after 6 months in this case) following your request.

We can only perform a capital reduction on an instalment sale agreement and the amount has to be more than R1000 (excluding rebate interest).

Should you require any further details please do not hesitate to contact me.

Kind Regards
Subashnee Naicker
011 649 5345
naickers@wesbank.co.za

 

[Polk]

Hi Subashnee,

Thank you for your reply. It's starting to make a lot more sense.

I just have 2 more questions; am I allowed to make a capital reduction every month (if the amount is equal to or greater than R1000) without any penalties? I would like to make a R1000 capital reduction every month without having to first build up a larger amount in the Advance account.

Secondly, for me to do this do I transfer money directly into my finance account via internet banking and request the capital reduction or does it need to go to a different account?

Thanks again for your help.

 

[Polk]

Sorry Subashnee I have one more question

I would phone but I think the information would be very useful to everyone.

How does making capital reductions effect your residual?

My assumption is that the residual is calculated on the percentage of capital and will decrease according to such percentage when the capital is reduced via capital reductions. Is this correct?

Thanks again!

Hi Subashnee,

Thank you for your reply. It's starting to make a lot more sense.

I just have 2 more questions; am I allowed to make a capital reduction every month (if the amount is equal to or greater than R1000) without any penalties? I would like to make a R1000 capital reduction every month without having to first build up a larger amount in the Advance account.

Secondly, for me to do this do I transfer money directly into my finance account via internet banking and request the capital reduction or does it need to go to a different account?

Thanks again for your help.

 

[Viper25]

Thanks for the reply Subashnee.
Just one more question, I was told by wesbank that I need to fax through
proof of payments before I can request for a capital reduction? Is this true,
If it is true, why? The advance amount is on your system, why would I need to
fax through proof of payment?
Thanks for your help

 

[xrapidx]

Whats the benefit of a "capital reduction", as opposed to the money just lying there earning rebate interest.

Is the benefit in captial reduction only in terms of "reducing monthly payment" OR length of contract?

I just started this month by pumping in double my payments each month... but was just going to transfer and earn rebate interest, expecting the loan to end sooner.

 

[requiem]

Any more info?... would also like to know

 

[Viper25]

Subashnee please come backkk

 

[mak2000]

Is the Interest rebate at the same rate as your loan rate or is it at a different rate ? It would be better to make a capital reduction if the rebate rate is lesser than the loan rate. Does anyone know?

 

[xrapidx]

Someone phone them

I'll quickly work it out from my statement

 

[xrapidx]

Statement as follows:
Balance :: R76,432.61
Interest :: R732.09
Int % :: Interest/Balance * 100 * 12 = 11.49%pa

Rebate
Advance :: R 4,728.43
Rebate :: R 41.09
Int % :: Rebate/Advance * 100 * 12 = 10.43%pa

 

[Colin62]

Smell the Vaseline

 

[mak2000]

Looks like it is better to do a capital reduction rather than just paying in the extra amounts as the bank is scoring about 1% on your advance payments.

@Polk, now you know why they make it painful for you to make capital reductions vs advance payments. So now depends on how much extra payments you were gonna make and whether a saving of 1% vs the hassle of faxing is worth your time.