Charged an excessive fee for early payback

kenlau

Hi
I had taken out a loan with Clode Finance over a year ago on a buy now pay in 12 month deals. I brought a new PC for £1800+. When My option after a year to pay back the full amount or to start the three year monthly payment plan. Because last year of the recession, I opted to pay monthly until I was certain of my job. Last week I felt secure enough to pay off the full amount, I figured I have been paying six months payments already always on time so the amount should not be more than £200+ in interest charges for closing the loan early. But I was shocked I was charged £2177 (that's after taking into consideration my pervious 6 payments and that I ended the loan 2 1/2 year early. Is £800+ excessive to charge for this? I have contacted them to ask for an explaination but they said it is normal, and have asked me to speak to the ombudsman. So I will, but would like to know if anyone else had a similar experience or can help me with getting some of this interest back. Thanks in advance

Ken

CLAPTON

do remember that the first year is only interest free if you pay in full within 12 months other they charge you the full interest from the day of purchase.
These type of loan are pretty notorious as being very expensive.

however

what was the APR
what was the total period of the loan
the first 12 months was payment (but not interest free)
how may installaments have you paid
how much is a monthly installment

kenlau

I can't remember the APR, I already paid six payments into a 3 year term, the payments were £91. So do think it is very excessive paying that much interest

CLAPTON

the APR is very important

but lets say it is around 35%
at the end of the first year you would then owe
1,800 plus interest of 1800 x 35% =
650
making a total of 2,450

so you now have to reapy 2,450 at 35% over 36 payments
after 6 of these payments then the balance remaining would be over 2,200

so that's the sort of way it works but of course I'm guessing at the APR.

whether the interest is excessive or not is a relative thing but these deals are notorious for trapping people into high APR deals.

kenlau

Thank you for your reply

Guess it is an expensive lesson.
Just think it is wrong for companies to do that when we pay it off early, especially during these times of financial difficulties.

inmypocketnottheirs

kenlau wrote: »

Just think it is wrong for companies to do that when we pay it off early, especially during these times of financial difficulties.

Always best to check the terms and conditions before entering an agreement than to dispute them afterwards. Everything would have been made clear to you.

I purchased a PC from Misco with the Buy Now Pay Later Option through Clode and settled by agreement prior to the commencement of the interest bearing period.

When buying on Buy Now Pay Later I guess it makes sense only if you are certain of your ability to settle prior to the interest free period expiring.