Hire purchase

TheBizz1979

Evening all,

I have been searching the forum and other sites and I can't find an answer to my question, I am hoping that someone might be able to shed some light on the following for me.

Since February 2011 some extra protection for consumers was introduced under the Consumer Credit Directive (CCD). The specific part I am interested in relates to rights to make partical payments off loan and HP agreements. What I am not clear on is whether or not there are any penaties of fees that the lender is able to charge- I think that the new directive was introduced to stop this from happening, but I am not sure.

The reason I am interested is because I am in the process of buying a new car and I am considering getting it on HP. My thoughts were that I could spread the term over the maximum period and then pay well over the agreed amounts thus reducing the interest. The benefit of this will be that the complusory amount that I have agreed to pay each month will be significantly less. (I have two months of every 12 in which I have to pay my tution fees for Uni and I do not wish to over commit myself).

I would be grateful for anyone views of this.

Many thanks

TheBizz1979

Anyone got any ideas?

Many thanks
Lee

mikopaul

Hi

I am new to this - and just posted my first request tonight looking for some guidance along similar lines .... but I may be able to help with some advice as I looked into this recently - there is legislation from 2004, the Consumer Credit (Early Resettlement) Regs 2004 -[Google it - see below - I can't put in the link] - this essentially says (paraphrasing and from memory - so please check some of the details to be certain) - that they can apply interest for approx an extra 2 months from receipt of the notice to cancel - but other than that they have to settle up as if it were "actuarial neutral" I think is the phrase. This note from the Competition Commission gives a decent explanation (see points 5 & 6) - [MSE won't let me put in the address as a newbie - google Competition Commission Credit Consumer Early Resettlement and you should get it]
Paraphrasing point 5 in the note - The early settlement figure is the amount which would need to be paid, on settlement date, to redeem the loan. It is the principal loan with compound interest up to settlement date less the instalments paid with compound interest up to settlement date (plus the extra 2 months worth of interest).

Like you - I thought there was an update to this legislation more recently - but I can't find it right now I am afraid. Also - this doesn't give you any advice if you overpay but don't fully settle, but I believe that if you end up shortening the loan period through overpayment then you are due a rebate at the end when you settle early.

I hope this is helpful and apologies if I am going along the wrong lines

TheBizz1979

Thank you for your reply Mikopaul.

I believe that it the consumer credit directive 2010 - I am unable to post a link because I am a newbie!!

I have contact Blackhorse Finance Ltd who informed me that I can make overpayments as and when. They also informed me that they do not making any charge for this. I was quite surprised - I would be interested to hear if anyone has any experience of making overpayments, since the introduction of the new legislation.

Many thanks