Very confused: Help please?

Seanymph

Santander.

We have finance on a car - last month we called to discuss making an early part repayment. We were told it would save us most in interest if we applied it to the account to reduce the monthly repayment rather than to reduce the term.

So, we sent £1,000 and a letter specifying that we wanted to reduce the monthly repayment.

THREE weeks later we received a letter asking what we wanted to do with the money - mysteriously they knew who to write to, had taken this months payment from the cheque, but 'had no record' of the letter accompanying the cheque to know what to do with the balance!

OH telephoned, and confirmed 'reduce the monthly repayments if that means we save most interest'.

Now we have received their letter of confirmation.

My £1,000 payment has changed to

'we have appleid a rebate of £132.15 to your account.

Future payments have been reduced by about £5 a month for the 27 payments remaining!

Now, I gave them a thousand pounds!!!

can anyone shed any light onto what the thieving gits may have done? They aren't open until 9am tomorrow, and can make no sense of this letter at all.

I'm very very cross.

It took over a month to apply it to the account, they 'lost' the letter - they took a months payment from the cheque meaning that the full £1,000 didn't get paid early and now it seems it's only actually saved me £132!!

cheops2006

Sounds like £5 * 27months = £135, Where is the other £865

Something doesn't sound right

bsms1147

What's the monthly cost and APR?

Seanymph

The monthly costhas been reduced to £163.26 - I don't know the APR - I'm sure I did to start with - I probably have it on hte original paperwork.

We have an outstanding balance currently of £4721.28

pvt

I'm mystified by their original advice. I would have thought that applying the lump sum to shorten the term, keeping the repayments the same, would be the better option and lead to you paying less interest overall.

SeanG79

Saving the most would have been to allocate the £1000 towards the capital and then maintain the same monthly payments but shorten the term.

Figures don't seem to add up, you say the outstanding balance is £4,721.28 but 27 payments of £163.26 is only £4,408.02.

Seanymph

Thank you all.

I was wrong in my initial post - OH has checked his figures, so - here is my (his) loan:

We borrowed £6,000 over 36 months.

First payment £346.67 then 34 at £196.67 then £346.67 to finish.

A total to pay back of £7,380.12. (WOW!!!)

The contract which, of course, I've only read today - says 15% APR. Is this right? It seems terribly high...

I was assured at the garage I could repay it early, and save my interest (ie. it wasn't 'front loaded') - twice I was assured that, as I had every intention of repaying early.

Last month was the first early repayment I'd made - I phoned twice to ensure I was applying it correctly to save maximum interest - and the saga above ensued.

it took over a month to get it applied to the account, and now I have the letter which says:

I have 27 more payments of £163.26 plus a final payment of £313.26.

By my reckoning (if anyone could check I'd be very grateful).

I paid 1 x £346.67 £346,67
then 7 x £196.67 £1376.69
Now 27 x £163.26 £4,408.02
and a final payment now of £313.26 £313.26

Which decreases the total paid from £7,380.12 to £6,444.64

Which just about saves me the £1,000

Have I done that right?

Foxy-Stoat_3

We borrowed £6,000 over 36 months.

First payment £346.67 then 34 at £196.67 then £346.67 to finish.

A total to pay back of £7,380.12. (WOW!!!)

The contract which, of course, I've only read today - says 15% APR. Is this right? It seems terribly high... if that is what the contract says and thats what you agreed to then yes. Bank loans are usually cheaper than car finance, maybe find out the settlement figure and get a bank loan and clear it.

I was assured at the garage I could repay it early, and save my interest (ie. it wasn't 'front loaded') - twice I was assured that, as I had every intention of repaying early. And they confirmed this in writing? Don't forget a salesman was talking to you, not the underwriter or customer service department for the loan company.

Last month was the first early repayment I'd made - I phoned twice to ensure I was applying it correctly to save maximum interest - and the saga above ensued.

it took over a month to get it applied to the account, and now I have the letter which says:

I have 27 more payments of £163.26 plus a final payment of £313.26.

Ask for a statement or wait until the annual one comes it, it will lay out all the credits and debits. Is there any early repayment charges detailed in the contract?

SeanG79

Seanymph wrote: »

Thank you all.

I was wrong in my initial post - OH has checked his figures, so - here is my (his) loan:

We borrowed £6,000 over 36 months.

First payment £346.67 then 34 at £196.67 then £346.67 to finish.

A total to pay back of £7,380.12. (WOW!!!)

The contract which, of course, I've only read today - says 15% APR. Is this right? It seems terribly high...

I was assured at the garage I could repay it early, and save my interest (ie. it wasn't 'front loaded') - twice I was assured that, as I had every intention of repaying early.

Last month was the first early repayment I'd made - I phoned twice to ensure I was applying it correctly to save maximum interest - and the saga above ensued.

it took over a month to get it applied to the account, and now I have the letter which says:

I have 27 more payments of £163.26 plus a final payment of £313.26.



But I still remain unconvinced that reducing the monthly payments saves most in interest - I just can't seem to get my head around it.

by those figures, taking into account that they took 1 months payment out of the £1000. you have saved yourself £98.74 from paying the £833.33 (the amount left after the 1 payment was taken).

Still the best way would be to have kept the monthly payments the same and shortened the term.

15% APR is quite high but I have seen higher even from Santander. What happens with dealer finance currently is the dealer has a "base" rate and they earn commission on whatever they sell over that base rate. In all probability you could have negotiated down the rate slightly.

SeanG79

Oh I forgot to mention. Santander do not front load the interest, but you must remember because its a reducing balance, initially majority of your payment still goes towards interest

Seanymph

Thank you both for your time.

So I have twice been advised incorrectly by Santander who categorically told me to lower the monthly repayment would save me interest?

In fact the 'missing' letter that accompanied the cheque stated that we wanted it applied to the account 'in such manner as saved the maximum in interest and we were told this had been to reduce the monthly payment'.

I have £500 this month to make another overpayment - I need to reduce the term then? (Just so I'm sure).