NCR - Penalties for settling early?

HapticSimian said:
Yep, just notify the bank that you want to reduce the capital, and keep an eye on your monthly statements.

Also, no penalties for settling anything below R250k early, over that you need to give 3 months' notice of your intent to avoid penalties.
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Can this 3 month notice period change from contract to contract, or is it always 3 months regardless of whether it is for vehicle finance, bond etc?
 
bromster said:
Can this 3 month notice period change from contract to contract, or is it always 3 months regardless of whether it is for vehicle finance, bond etc?
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It applies universally to credit agreements concluded in accordance with the the NCA, regardless the reason for the credit.
 
Park@82 said:
Why would you need to do that?
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See this thread. I would assume the same being true for all the banks in that any additional monies paid into a vehicle finance account get allocated as advanced payments by default. By reducing your outstanding capital amount you are effectively eating into the profit the bank would stand to make from your agreement. They're not going to do so without you instructing them to.
 
HapticSimian said:
See this thread. I would assume the same being true for all the banks in that any additional monies paid into a vehicle finance account get allocated as advanced payments by default. By reducing your outstanding capital amount you are effectively eating into the profit the bank would stand to make from your agreement. They're not going to do so without you instructing them to.
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Thanks for the explanation, I am a total noob when it comes to these things. I made some extra payments into the account during the last couple of months without any instruction to them.

The account overview with Wesbank is showing the following (rounded):

Current Contract Balance: R 160,600
Original Contract Balance: R 204,100

Current Capital Balance: R 110,900
Original Capital Balance: R 149,800


Statement is showing the following:

Installment Due Date : 2013/11/30
Installment Due Amount : R 2,800
- Advance Amount : R 25,400
+ Arrear Amount : R 0.00
Amount Due : R -22,700.

In the statement there is a line showing "REBATE INTEREST" (around R200) that is a credit amount.

Does the above indicate that the extra payments are reducing the capital amount?
Or is it simply seen as "advanced payments" and I am actually losing out on interest reduction?

How can I make 100% sure?
 
Park@82 said:
Thanks for the explanation, I am a total noob when it comes to these things. I made some extra payments into the account during the last couple of months without any instruction to them.

The account overview with Wesbank is showing the following (rounded):

Current Contract Balance: R 160,600
Original Contract Balance: R 204,100

Current Capital Balance: R 110,900
Original Capital Balance: R 149,800


Statement is showing the following:

Installment Due Date : 2013/11/30
Installment Due Amount : R 2,800
- Advance Amount : R 25,400
+ Arrear Amount : R 0.00
Amount Due : R -22,700.

In the statement there is a line showing "REBATE INTEREST" (around R200) that is a credit amount.

Does the above indicate that the extra payments are reducing the capital amount?
Or is it simply seen as "advanced payments" and I am actually losing out on interest reduction?

How can I make 100% sure?
Click to expand...

The interest rebate is your interest saving - so you have reduced your capital amount.
 
Park@82 said:
Thanks for the explanation, I am a total noob when it comes to these things. I made some extra payments into the account during the last couple of months without any instruction to them.

The account overview with Wesbank is showing the following (rounded):

Current Contract Balance: R 160,600
Original Contract Balance: R 204,100

Current Capital Balance: R 110,900
Original Capital Balance: R 149,800


Statement is showing the following:

Installment Due Date : 2013/11/30
Installment Due Amount : R 2,800
- Advance Amount : R 25,400
+ Arrear Amount : R 0.00
Amount Due : R -22,700.

In the statement there is a line showing "REBATE INTEREST" (around R200) that is a credit amount.

Does the above indicate that the extra payments are reducing the capital amount?
Or is it simply seen as "advanced payments" and I am actually losing out on interest reduction?

How can I make 100% sure?
Click to expand...

You're ±R25k ahead on your instalments without having reduced your capital amount any more than sticking to your normal repayments would've done. So yes, you're losing out, or rather you're not really benefiting from the extra payments you've made. It ultimately depends on what you want to accomplish though. As things stand you effectively wouldn't need to pay anything for 9 months, whereafter your instalment will revert to its prior R2,8k per month. Or you could instruct them to use the accumulated money as a capital reduction which should save you R400 or R500 per month on your instalment.
 
Sinbad said:
The interest rebate is your interest saving - so you have reduced your capital amount.
Click to expand...
So you disagree with HapticSimian?

HapticSimian said:
You're ±R25k ahead on your instalments without having reduced your capital amount any more than sticking to your normal repayments would've done. So yes, you're losing out, or rather you're not really benefiting from the extra payments you've made. It ultimately depends on what you want to accomplish though. As things stand you effectively wouldn't need to pay anything for 9 months, whereafter your instalment will revert to its prior R2,8k per month. Or you could instruct them to use the accumulated money as a capital reduction which should save you R400 or R500 per month on your instalment.
Click to expand...
Thanks again, this type of thing makes my head hurt. :(

I dont fully understand though, the overview shows:
Current Capital Balance: R 110,900
Original Capital Balance: R 149,800

But the contract is only about 4 months old so is seems that my extra payments are reducing capital.

The aim is to pay it off sooner thereby reducing the total interest that I end up paying.
The contract was taken over 72 Months, the plan is to pay it off/settle it at about 36.
 
This capital vs interest portion doesn't make any sense to me.
It looks like an elaborate system to rip off the consumer.
 
Park@82 said:
So you disagree with HapticSimian?


Thanks again, this type of thing makes my head hurt. :(

I dont fully understand though, the overview shows:
Current Capital Balance: R 110,900
Original Capital Balance: R 149,800

But the contract is only about 4 months old so is seems that my extra payments are reducing capital.

The aim is to pay it off sooner thereby reducing the total interest that I end up paying.
The contract was taken over 72 Months, the plan is to pay it off/settle it at about 36.
Click to expand...

I'm a bit rusty, so I'm probably overlooking something, but the figures just don't seem to add up. What it looks like is that they're reflecting the capital reduction you would see if your accumulated payments are held until the end of the term. It's all a bit odd. Long & short is that a capital reduction should see an accompanying reduction in instalment, and it doesn't look like you're seeing that.
 
Park@82 said:
So you disagree with HapticSimian?


Thanks again, this type of thing makes my head hurt. :(

I dont fully understand though, the overview shows:
Current Capital Balance: R 110,900
Original Capital Balance: R 149,800

But the contract is only about 4 months old so is seems that my extra payments are reducing capital.

The aim is to pay it off sooner thereby reducing the total interest that I end up paying.
The contract was taken over 72 Months, the plan is to pay it off/settle it at about 36.
Click to expand...

Yes I do disagree with Mr HS on this one.
The outstanding capital balance shown is taking your advance into account. There's no way you've paid off 40k of capital in the first four months of a contract on the standard repayment schedule.
 
HapticSimian said:
I'm a bit rusty, so I'm probably overlooking something, but the figures just don't seem to add up. What it looks like is that they're reflecting the capital reduction you would see if your accumulated payments are held until the end of the term. It's all a bit odd. Long & short is that a capital reduction should see an accompanying reduction in instalment, and it doesn't look like you're seeing that.
Click to expand...

HS they don't decrease the instalment by default, they decrease the term. You could ask them to recalculate the repayments, I'm sure... but most people putting in a lump sump wouldn't want that, they'd want to pay off sooner.
I'm in a similar position on my contract - and I get an interest rebate each month as well (which further decreases the outstanding capital)

That capital outstanding figure on the statement is the real capital position as of right now. IE, your settlement quote will be that amount.
 
Sinbad said:
Yes I do disagree with Mr HS on this one.
The outstanding capital balance shown is taking your advance into account. There's no way you've paid off 40k of capital in the first four months of a contract on the standard repayment schedule.
Click to expand...

Sinbad said:
HS they don't decrease the instalment by default, they decrease the term. You could ask them to recalculate the repayments, I'm sure... but most people putting in a lump sump wouldn't want that, they'd want to pay off sooner.
I'm in a similar position on my contract - and I get an interest rebate each month as well (which further decreases the outstanding capital)

That capital outstanding figure on the statement is the real capital position as of right now. IE, your settlement quote will be that amount.
Click to expand...

I'll cede to your interpretation on this one; haven't worked with such matters in a long, long time. :)
 
Park@82 said:
Are they automatically decreasing the term on your statement?
Mine says:

So it seems not in my case.
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When your balance hits zero you will stop paying... Contract length doesn't change
 
I have a question regarding the repayment of loans. If one takes out a loan and settles it early, is it true that your credit rating takes a knock? I ask this as I've read (possibly on this forum) that paying off a loan earlier knocks your credit rating.
 
XennoX said:
I have a question regarding the repayment of loans. If one takes out a loan and settles it early, is it true that your credit rating takes a knock? I ask this as I've read (possibly on this forum) that paying off a loan earlier knocks your credit rating.
Click to expand...

No!

If anything it will improve it.
 
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