Settlement figure on a loan

jwspurs

Hi,

Looking to settle a HFC Direct loan I took out in Mar 2005, and just wondered if the settlement figure quoted is correct as it seems high to me.

Loan amount £12500
Term 54 months
Mthly payment £312.79
Total interest £4390.99
APR 14.8%
Rebate £1658.69


Loan started March 2005 but due to DD error 1st payment taken May 2005.

Have been quoted settlement of £9635.48, have been advised that this includes 2 months of severance interest???

Does this appear to be correct?

Thanks

Jason

grumbler

I am not an expert in loans and don't know what the 'rebate' is. This calculator gives slightly different figure for monthly payments. However, according to it, your current balance is about £9210, two-months interest is about £230. If we add missed first payment, we get about £9570 that is not far from the figure you've been quoted.

jwspurs

Thanks for that

Is is common practice for a loan company to charge 2 months interest when you request to settle a loan early, I was advised when taking out this loan no penalty charges would be made if settled early.

grumbler

This is very common practice, particularly for loans with the lowest interest rates (not like yours). If you were told that there were no early settlement charge, check the Credit Agreement that you have signed. If it says the opposit, you can either blame yourself for not reading it before signing, or to complain about being misadvised, although it could be very difficult to prove this.

iolanthe07

I understood that HFC do not make charges for early repayment, and this is their justification for charging high rates.