0.0% APR Consumer Finance

dryjoy

Hello

I have placed an order for a new computer from Apple, using the UK HE discount, as I work at a University. I applied for and have been approved for a 0.0% APR consumer finance option, to pay back the total in 10 equal monthly instalments.
Before I sign and return the payment agreement, I need to be sure that I understand it all. I do not normally take credit like this, but have been tempted.
The part I don't understand is this:
"Early Settlement of this agreement – If you choose to settle this agreement early on the dates below the amount you will pay, per £1,000 borrowed (unless you borrow less than £1000, where the amount is based on per £100 borrowed) will be: When a quarter of the term has elapsed £700.00, When half of the term has elapsed £500.00. When three quarters of the term has elapsed £200.00."
Does this mean that if I repay early, these amounts would be added to the total cost of the loan, or does it mean that I could repay early with no penalty (in fact, saving a little money)? I have assumed the former, except that a £700 early repayment charge on a £1000 seems pretty steep to me.
It is hard for me to understand how this works, as there seems to be no charge for the loan, as if I paid upfront direct to Apple, the total amount payable would be the same.
Any advice, much appreciated.
This is in the UK, by the way.

theartfullodger

What did the lender say when you asked what it meant??

Cheers!

Lodger

PS Any 0% interest deal sadly just means you've probably paid over-the-odds for whatever it is you are buying...

Kavanne

theartfullodger wrote: »

PS Any 0% interest deal sadly just means you've probably paid over-the-odds for whatever it is you are buying...

Apple's prices are pretty rigid and he's bought direct also with 14% HE discount so he'll have a much better deal than many.

You won't get any saving for paying it off early because there's no interest for you to save. I think there is an arrangement fee for this finance so watch out for that.

dryjoy

Well... I haven't asked the lender yet as it was too late in the day when I read through the agreement.
I'm not sure how I would be paying over the odds. Can you explain?
I have ordered an Apple Mac computer from the Apple online store, which costs £1,796.30 inc VAT if you pay straight up. The finance agreement consists of 10 monthly payments of £179.63.

dryjoy

There doesn't appear to be any arrangement fee, I assume because the 0% finance over 10 months is a special offer running from March - June 2009 only. They must need a sales boost.
It's not a big deal if there's nothing to save for paying it off early, but what I was really trying to find out is whether the wording I quoted meant that I'd get clobbered with a massive fee for paying off early.
If not, then I will definately go through with this deal, as there does not appear to be anything to lose over and above buying it straight up.

Kavanne

of course we can't see the full agreement so if i were you I would call the finance provider and ask about early settlement fees

dryjoy

Thanks. I think you're right. I will do that.

blueye

sounds like something i had with dfs bought a couch 0% interest 24 payments same type of thing its just saying..
if you borrowed 1k over 10 months at £100 a month and wanted to pay off early, say 5 months in, you would have a £500 balance left to pay because you have already paid £500 it dosent mean they will add £500

TheGrant

It means what it says on the tin.

You can't settle at one quarter of the way through ten as that's 2.5. So you'll have paid 3 months of 3x100 = 300 and have 700 left to pay. Half way is fine, that's 500 paid and 500 left. Three quarters is like one quarter and you'll have paid 800 and have 200 left.

Your repayment amounts at the one quarter, one half and three quarters will be 1257.41, 898.15 and 369.26.

Easy at 0%. A bit harder to work out if there was interest and ppi etc.

Good deal, esp with HE discount. Quidco? ;-)

dryjoy

TheGrant wrote: »

It means what it says on the tin.

That's great, I thought it did, but I have never actually taken consumer credit on anything before, and normally shy away from it, so just needed to get another opinion.

TheGrant wrote: »

Good deal, esp with HE discount.

Yeah, I thought so. And on that basis, I'm gonna get those forms printed, signed and returned tonight!
Thanks to all who have replied.