Car Finance Con!

Kitz909

I purchased a car on a finance agreement in 2012!

The total cost of the car brand new was £11,647. I paid an initial deposit of £2,300 at point of purchase , leaving £9,347 left to pay over a 5 year finance agreement.

To my understanding , the total amount re-payable including interest was £11,760.

I have recently cashed in some savings and decided to pay the rest of the finance off. When I called to inquire about paying , I was horrified to be quoted an additional £8418.78 after paying 22 monthly re-payments totalling £4862.22.

I took it up with the complaints department who kept banging on about a 'daily rate charge of finance' which is what's bumped the cost up significantly!

After going through my documents , there is absolutely no mention of this daily charge! I feel totally conned!

Is there anything I can do?

Tixy

Where have you got the figure of £11760 from? presumably from the agreement? what does it say next to this?

You say you have paid £4862.22 in 22 payments - so were your payments each £221.01?

If so then if the agreement was over 5years then was the total of those payments not £13260.6? (being 60 x £221.02)

The daily charge just means that interest is charged daily on the outstanding amount, not a charge in addition to interest.

PeacefulWaters

Why not list all the numbers on the agreement?

The answer will be in there somewhere.

PPI?

Gaz83

Interest is usually charge on outstanding balances daily.

For example: say your interest rate was 36.5%*. This means for every day you would be charged 0.1% interest.

So if you borrowed £10,000, after one day you'd owe an extra 0.1% of this, which would be £10,010. After another day you'd owe an extra 0.1% of this, £10.01, so £10,020.01. After another day you'd owe an extra 0.1% of this, £10.02, so £10,030.03.

This is the way interest agreements work.

Not to mention they are allowed to charge up to two months' interest for early settlement.

*To simply calculations.

iolanthe07

The total cost of the car brand new was £11,647......the total amount re-payable including interest was £11,760.

It is very unlikely indeed that the interest over five years would only be £113 total, unless it was some really super deal. Even the interest free deals are usually onlyfor a maximum of two or three years - often just one year.

PeacefulWaters

iolanthe07 wrote: »

The total cost of the car brand new was £11,647......the total amount re-payable including interest was £11,760.

It is very unlikely indeed that the interest over five years would only be £113 total, unless it was some really super deal. Even the interest free deals are usually onlyfor a maximum of two or three years - often just one year.

I think you've overlooked the deposit.

The total cost of the car brand new was £11,647. I paid an initial deposit of £2,300 at point of purchase

bsms1147

Does an 'APR vs flat rate' discussion fall into this somehow?

If the OP was quoted a flat rate of ~9%, but mistook this as an APR, the total payable including interest would be believed to be around £11,760 on top of the deposit.

But in actuality a flat rate of 9% would see the total payable as closer to £13,500 on top of the deposit, which tallies closer with the settlement figures.

Of course it's all rampant speculation at this point though.

iolanthe07

PeacefulWaters wrote: »

I think you've overlooked the deposit.

Yes - sorry. I should read posts more carefully.

PeacefulWaters

It's disappointing when somebody posts a question but then doesn't return for over 24 hours.

iolanthe07

PeacefulWaters wrote: »

It's disappointing when somebody posts a question but then doesn't return for over 24 hours.

Happens a lot, though.

Gaz83

iolanthe07 wrote: »

Happens a lot, though.

Usually when they get the (albeit correct) information they don't want to hear.