Car financing - making capital payments (Wesbank)

[xrapidx]

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.

This is ony one example I'd have to check other months to see if its consistant.

 

[WesBank]

Hello Polk

Yes, you are allowed to do a capital reduction monthly on an instalment sale agreement provided it is a minimum of R1000. There are no penalties.

You can transfer the extra money into your WesBank account via internet banking and then request the reduction.

Regards

Subashnee

 

[WesBank]

Hello Polk

The residual is not affected at all when doing a capital reduction. The residual value is predetermined at inception and does not change.

 

[WesBank]

Hello Mak2000
Yes, the interest rebate is calculated at the same rate as your contract. It is only calculated on the amount you pay in advance and not on the advance amount inclusive of the rebate interest.

 

[WesBank]

Hello Viper25
It is essential that we confirm that the payment was made by you to avoid any possible problems. An example would be where a customer uses an incorrect reference number when paying his account and as a result the payment goes into your account and the account is in advance by this payment. It is security to us.

 

[xrapidx]

Hello Viper25
It is essential that we confirm that the payment was made by you to avoid any possible problems. An example would be where a customer uses an incorrect reference number when paying his account and as a result the payment goes into your account and the account is in advance by this payment. It is security to us.

Ah ... interesting - I was also quite annoyed when asked for this last year.

 

[Colin62]

Hello Viper25
It is essential that we confirm that the payment was made by you to avoid any possible problems. An example would be where a customer uses an incorrect reference number when paying his account and as a result the payment goes into your account and the account is in advance by this payment. It is security to us.

So if someone does an EFT into my current account the bank needs a fax to prove it was intended for my account? I don't think so...

I think it's a dodgy system, and the difference in interest rates makes me more than slightly suspicious that it might be that way deliberately.

 

[xrapidx]

So if someone does an EFT into my current account the bank needs a fax to prove it was intended for my account? I don't think so...

I think it's a dodgy system, and the difference in interest rates makes me more than slightly suspicious that it might be that way deliberately.

Its quite possible - most banks have then as an authorized beneficiary - and all you do is provide the account number, if you slip up, it goes to the wrong account.... some people are absent minded and don't check upon transfers (like my Mom).

RE: Interest - Wesbank has stated there is only one interest rate? My calculation includes the interest rebate, if I remove that and only calculate interest on advance, its the same as my contract interest.

I've had my run-ins with Wesbank - but I haven't seen any other banks registering to answer questions?

 

[ALFAHOLIC]

I don't think the loan would END SOONER...it will just get less...so the SOONER you pay it off by making extra payments and in TIME(6 months) declare a capital payment which by then would have earned you rebate interest, will the car be paid off SOONER. Its NOT like BOND PAYMENTS...I've tried this system from all angles...maybe Toyota finance is just crap. But yes, like WESBANK explained...but paying it off SOONER...nope, don't look at it in terms of TIME...look at it in terms of HOW MUCH YOU STILL OWE, and HOW MUCH YOU ADD EXTRA each month...this will determine the TIME.

 

[xrapidx]

^^^

I have no clue what that means.

 

[Viper25]

^^^

I have no clue what that means.

+ 1

 

[ALFAHOLIC]

It means...if you still have to pay your normal monthly installment of R2000pm for the next 3 years that you have left as agreed contractually...by paying R3000 monthly will NOT lessen the amount of years or months!

BUT...by paying R3000 (R1000) extra each month for the next year, with carefull calculation, at the end of the year of paying an extra R1000, you call them up, fax them the proof that you paid R1000 extra for a whole year, or email it to them on this form that you guys speak of...they will now see that you've paid an extra R12000 to your owed amount....so this amount will just be deducted from your owed amount.

Gerrit?

Now, assume a year ago before you paid the extra R1000, you owed R40 000 over the next 3 years...for arguments sake.

Now it will be the NORMAL R24 000(R2000pm) you paid over the year as per normal + an additional R12 000 (R1000pm) your owed amount now goes down to only R4000 owed by you!!! So, effectively, you'll only pay for 2 more months...

This is a crap example but it works along those lines...so you'll effectively have 2 more years to pay off that R4000 owed....but I'm sure with an amount like that they'll ask if you cannot settle or you're installement will be considarabbbllllly low...

This is how I understand it..sorry if its TOTALY wrong

 

[xrapidx]

If you have a debit order for the monthly installment of R2000 - it'll be paid off and settled in 2 months.... not over the remaining contract term.

If you don't have a debit order, and you decide not to pay off the remaining R4000 and leave it in their until the payments are due again, you'd be an idiot as you'd be paying interest for those months on R4000.

 

[Viper25]

Ok, so I paid in about 10K into my wesbank account. Should I call in and ask them to recapitalize?
Or should I just leave it as it is and earn interest on the 10K? Hmmm
I need to get out my calculator..

 

[bladzok]

Capital reduction

Ok, so I paid in about 10K into my wesbank account. Should I call in and ask them to recapitalize?
Or should I just leave it as it is and earn interest on the 10K? Hmmm
I need to get out my calculator..

1. You pay interest on the contractual amount (i.e. the amount you should owe at this stage in the contract)

2. You get interest back on the the advance amount (i.e. the amount you have paid in over and above what you we contracted to pay)

The interest rate on 1. is higher than on 2. So it is better to reduce capital. You push the money from 2 into 1.

If for example your contract says you still owe R100 000 on your car, but you put an additional R100 000 into your account. You will be charged interest on the R100 000 (contract amount) - at say 10%, and you will get a rebate on the R100 000 you put in at say 8%. You still end up having to pay interest - even though your capital amount is effectively R0.

 

[Weasley]

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

What is the email address?

 

[powermzii]

What is the email address?

Talk about a Necros - 4yrs

service@wesbank.co.za

 

[Weasley]

Talk about a Necros - 4yrs

service@wesbank.co.za

thanks

 

[Thamza]

In my case, my monthly payment is R4000 and I asked Wesbank to take an additional amount of R1000; what this means is that R5000/month is automatically debited from my account. What I have noticed also is that the extra cash was kept as advance payment. I have just asked Wesbank to "capitalise the advance payment".
In the meantime I will just wait and see the impact of this decision.

 

[Sinbad]

Don't bother. You get an interest rebate in the advance anyway.