Trying to pay off HP is HARD!

FleaMedia · 14 November 2017 at 12:52PM

Long story but i will try to keep in brief. (NB. excluding all pence for ease and time)

I have a skoda on VW finance (HP) 7.39%APR totalling £11030 (inc. intrest)
I pay £183 a month for 5 years (I have made 17 of 60 payments)
i got a settlement quote last month at £7177
I paid £183
i got a quote this month at £7067 (£110 difference)

My first question is "Where did the £73 go?!"
I paid 1 month capital and one month interest, so should it not be that much cheaper?

I spent several hours on the phone trying to bash this out and got nowhere, I didn't really want to pay the 58 days interest for settling early anyway so i tried the old "pay everything but the last payment" trick and was told that they could not give me a figure of what I still owe minus the interest because it is applied at the start (even tho my statements say X amount capital + X amount interest each month (roughly £50 int + £130 cap but fluctuates slightly)) and I would have to pay the full £7067

Is this legal and above board?
How can they not know my current balance minus interest?
Am I just getting confused as to what is happening?

Any help would be appreciated.

Thanks

[Deleted User] · 14 November 2017 at 12:54PM

Interest.

Each monthly payment is part capital and part interest. In the early stages, most is interest due to the high opening balance.

It's legal and above all imaginable boards.

Integroo · 14 November 2017 at 12:59PM

Interest is the reason for the missing £73. They won't tell you your balance minus interest to stop you doing the trick of making an overpayment of most of the sum to avoid the penalty interest. Tesco did the same to me. I worked out roughly what it would be and made a slightly smaller payment than that, then checked my outstanding balance once they had applied the interest rebate, and then settled that amount (paying the penalty interest on the few hundred left over). It's difficult to work out exactly however and if you overpay they told me they would return the entire amount so I would suggest paying a little less than you think.

As an aside, I do think it is pretty poor form not to tell you your outstanding balance minus interest.

FleaMedia · 14 November 2017 at 1:02PM

well i was thinking of paying off £6750 and going from there but i don't know if this is a good idea.

[Deleted User] · 14 November 2017 at 1:04PM

It's a good idea if you want to save interest.

custardy · 14 November 2017 at 1:05PM

FleaMedia wrote: »

well i was thinking of paying off £6750 and going from there but i don't know if this is a good idea.

Well at worst you need another £317.

FleaMedia · 14 November 2017 at 1:06PM

(reply to your firs post)

I do understand there is an interest payment each month but-
- on my annual statement it shows all the payments for that year and it is consistently around 50 interest and 130 capital
- and in the mean time i have just made a payment of 183 with should cover this months interest and 130 capital so that interest should be deducted?

[Deleted User] · 14 November 2017 at 1:09PM

Interest will never be static, as the balance is reducing. So the information on the statement is either incorrect or being misinterpreted.

Payments are spread evenly across the term of the loan to make it affordable. As a result, the capital reduces slowly to begin with and more quickly towards the end.

FleaMedia · 14 November 2017 at 1:14PM

ignore that i, talking rubbish

[Deleted User] · 14 November 2017 at 1:15PM

Your settlement figure is improving. It is lower this month than last month.

FleaMedia · 14 November 2017 at 1:18PM

i know i had a quick brain fart.
i wafted the bad smell away and it has become clearer.
even so £70 difference between what i pay and how much it has reduced seams way out of proportion.

Trying to pay off HP is HARD!

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