His advocate, Charles Thompson, told the South Gauteng High Court, Johannesburg, that his client had planned to kidnap Matthews, extort a ransom from her parents and then release her.
Thompson was speaking in support of Moodley's application for leave to appeal against his life sentence.
In a statement read to Judge Loop Labuschagne, who sentenced him and who came out of retirement to hear his appeal, Moodley said his plans went wrong during the media storm around Matthews' disappearance, driving him to murder her on the "spur of the moment".
"The plan was to kidnap, extort and then release her," Thompson told the court.
"Due to media hype, the court may have given undue consideration to the demands of society," Thompson said, adding that Moodley had made a last-minute decision to kill Matthews in Walkerville, south of Johannesburg.
Moodley shot her once in the head and twice in the chest.
Thompson argued that the state failed to prove that the murder was premeditated, and said another court could have come to a different conclusion regarding his sentence.
Prosecutor Zaais van Zyl argued that the application should not be granted and that the "book should be closed" because the continuation of litigation was painful for Matthews' family and friends .
Matthews' mother, Sharon, sat quietly sobbing in the public gallery. She told The Times: "He's playing games. He should stop wasting taxpayers' money."
In 2005, Moodley was sentenced to life imprison for Matthews' murder, and an additional 15 years for kidnapping and 10 years for attempting to extort R50,000 from her family.
Judgment will be handed down next Wednesday.
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