crazy administration fee?

mrchimps

We currently have a soon expiring finance agreement with gmac, we took it out 5 yrs ago when we bought a car from a car supermarket.

We are looking to purchase a newer car, so asked them for a statement of early settlement.

we have 2 months of payments left, one for £110 and one for £160 so balance of £270.

Yet the statement gives and administration charge of £720.

I take it if I wanted to pay it off now I would have to pay them £990?
But if I just pay it off via the plan then I only pay £270?

If im right then how do they get away with stuff like this.

ALIBOBSY

Sounds about right for these type of lenders, it is crazy and unfair. But given that you have only 2 payments left I would just wait till the end of the agreement. If it was a longer period you could have looked to complain to the ombudsman over an unfair term, but there is no guarantees. The OFT have fined a few companies over high settlement costs, but the industry seem to keep slapping on extras.

good luck
ali x

mrchimps

Cheers, will be doing that.

Just didnt trust my own thinking over it and thought I must have made a mistake somewhere.

Cheeky b*ggers.

standupguy

It may be best to have another look at this as the £720 charge should be detailed on your Finance agreement and you should have known about it from the outset?

Is it more likely that the amount is administration "charges" - and reflects all of the charges they have added over the last 5 years to cover late payments and collection costs?

mrchimps

Havnt got the agreement with me, but will have a look when i get in.

It dosent say charges paid etc.

Gives us an early settlement date and when they need to recieve the £990 to go with this option.

mrchimps

after speaking to the finance company today it is indeed costs for missed or delayed payments and for every letter they have sent out.

After looking through the agreement I signed with them there are no mention of these charges being applied.

Do I just have to bend over and take this? or is there something I can do?

many thanks for the help so far.

standupguy

I thought that might be the case.

These charges are added throughout the agreement and in the majority of cases are collected when a customer settles a Finance agreement early - in many cases customers will be unaware these charges have been added and will just pay the settlement figure.

The thing to do is to let the agreement run its course and pay the outstanding two payments as and when they are due.

These charges cannot be added on to the capital due on agreements.

When the agreement is completed they may write to you asking you to pay the outstanding charges.

If they do, the first thing to request will be a full statement of account giving full details of the date, amount and reason for each charge.

Once you have this compare the charges to those detailed on the back of your agreement and make sure that they are not overcharging for a start.

You then need to take a view of whether each charge is considered fair and reasonable. For example £5 for a phone call may be just about reasonable but say £20 isn't.

If they have sent you a default notice and made a charge for this then they are not allowed to add further charges before the expiry date of each notice of default and you will need to check this.

You can then write back with your views and tell them you are making a formal complaint that you are prepared to take to the Financial Ombudsman Service if not resolved satisfactorily within the FSA guidelines for complaints handling and treating customers fairly.

There is a lot you can do but its one step at a time - depending on the Finance company stance.

Some companies do not even bother to try and collect charges on expired agreements.

mrchimps

Cheer Stand up

I did bolt the gun a bit and asked them for a breakdown of all the charges, they are posting it to me monday.

Will just pay off the 2 patments and look at it then

Cheers
Much appreciated.