Premium Credit - First Transaction more than entire quote

MysticGotenks

I recently took out insurance with Endsleigh and they run payments through Premium Credit.

I got a letter saying to register with Premium Credit for payments. When looking through the agreement, it says 'In respect to your first Transaction, the amount payable is £XXXX.XX. I am confused as the deposit was already paid and I decided to pay monthly which is triple figures a month, even with the deposit on top of first payment it shouldn't be anywhere near a 4 figure sum.

It then goes on to say 'If your Transactions equal the full credit limit of £1500.00, the total amount payable is £XXXX.XX. This number is more than the entire quote I got from Endsleigh, nearly £500 more. But is explained by adding together the Credit limit, Transaction Fee and deposit.

Can anyone explain to me what is being said. I know it's difficult without reading the entire agreement but my point is, I requested to pay monthly of three figure sums, yet my first transaction is a 4 figure sum nearly the entire amount of my insurance. I am misreading the term Transaction, does it actually mean the total amount payable at the end of the policy? There is no way I can be paying 4 figure sums a month for insurance, it's crazy and no where near what I was quoted.

dacouch

Need the actual figures eg monthly instalment, original premium, deposit paid and if possible interest rate

dunstonh

The actual credit amount, if it is a round figure of £1500, is probably the maximum credit allowed under the facility. Not that actual amount you are paying.

Typically, if you use a loan to pay the insurance, then there is an auto acceptance (in most cases) upto a certain floor limit. Above that you would be credit scored. What you have here is probably the floor limit.

MysticGotenks

From Premium Credit Agreement:

Monthly £101.80
Deposit £198.20
First Transaction £957.07
Transaction fee equal to 17%
Therefore First Transaction :£1,119.77
Credit Limit: £1500.00
37.9% APR (certain assumptions)

From Endsleigh Policy Docs

Total Amount Payable (including £198.20 deposit) : £1,317.89


Is the 'First Transaction' just the Year payment if I was to pay in full? As you can see the first transaction + 11 monthly payments of 101 is far, far off the total payment in my policy documents.

dunstonh

So, the £1500 is the credit limit as mentioned higher up. So, you can ignore that one.

The first transaction is the first amount under this arrangement. That is £1119.77. (it is the first time you have used this arrangement so it is the first transaction)

Your deposit is £198.20 and your monthly payments are £101.80

MysticGotenks

dunstonh wrote: »

So, the £1500 is the credit limit as mentioned higher up. So, you can ignore that one.

The first transaction is the first amount under this arrangement. That is £1119.77. (it is the first time you have used this arrangement so it is the first transaction)

Your deposit is £198.20 and your monthly payments are £101.80

Okay, I understand.

But the fact remains that the actual final sum (11 months time) will be much higher than stated in the Endsleigh Policy documents, correct?

dunstonh

But the fact remains that the actual final sum (11 months time) will be much higher than stated in the Endsleigh Policy documents, correct?

I make it the same.

11 x £101.80 is £1119.80 plus deposit of £198.20 makes it £1318. The figure stated

MysticGotenks

Oh. I was getting at the 1st transaction being £1119.80, then ANOTHER 11 months of £101.80. Evidently it's the sum of 11 months of £101.80 without deposit. Then with deposit makes it 1318. Fair enough, thanks for clearing that up Dunstonh.

dacouch

I think MSE often recommend for a premium of your size and interest rate, taking out a credit card with nil interest rate for 6 months. Paying the premium on that and then paying it back in the interest free period so you save yourself the interest charge.

It would need you to exercise restraint to not use the card for non essential purchases, but is worth considering for the future

vaio

yep, base rates at 0.5% and car insurance credit at 40% seems to be taking the pi$$

dunstonh

vaio wrote: »

yep, base rates at 0.5% and car insurance credit at 40% seems to be taking the pi$$

Short term credit would be expected to be more expensive. As would auto accepted credit (which the £1500 limit applies to). That said, you would expect something closer to the 20% mark and 40% seems greedy.