Why the balance is not the amount borrowed minus payments
Each payment covers interest first and principal second. Early on the interest share is large, so the balance falls slowly. A £30,000 loan at 9% has repaid only £10,416.48 of principal after two years.
The balance is the figure a new lender needs in order to settle the agreement.
Worked example
£30,000 at 9% over 5 years costs £622.75 a month. After 24 payments, £10,416.48 of principal and £4,529.53 of interest have been paid, leaving a balance of £19,583.52.
With 36 payments left, the interest still to come is £2,835.51. That is the interest a balance transfer could reduce if the new rate is lower.
Transferring the balance
Compare the new rate, any arrangement fee and the remaining term. A longer new term lowers the payment but can raise the total interest.
Ask the existing lender for a settlement quote valid on the day of transfer, because daily interest changes the figure.
Inputs for the commercial vehicle loan balance transfer calculator
Original loan amount
How much was borrowed at the start.
Interest rate (per year)
The yearly rate, charged monthly at one twelfth of the rate.
Original term
The full term of the loan, in years.
Payments made
How many monthly payments have already been made.
First payment date
The date of the first payment, used to show the schedule.
CALCULATOR QUESTIONS
Commercial vehicle loan balance transfer calculator questions
What balance will the new lender settle?
In the example, £19,583.52 after 24 payments on a £30,000 loan at 9%.
Is the transfer worth it?
Only if the new rate is lower enough to cover fees and the remaining term is sensible.
Does the term restart?
Yes. The new agreement has its own term, which may be longer than the time left on the old one.
Can I transfer a van loan with a balloon?
Sometimes, but the balloon must be settled or carried into the new agreement. Check both quotes.