Settlement figure help!

thisisarace

Hi all

i am after some advice hope someone can advise.

I bought a car on finance in Dec 2014, took out finance with the company, used my old car as part ex, ive decided to get rid of the car now so wish for a settlement figure and it seems way too high. can someone advise if it seems right, i have worked out an excel spreadsheet of the payments, interest balances etc and the price i have is a lot cheaper!

here are the figures

loan amount £5800
total payable £11120
interest charged £4930
option to buy £95
Document fee £295
loan taken over 60 months

so ive been paying £183.75 every month now inc Feb 2015 so 14 payments, i also made a partial settlement on my account of £3000 last week. (total paid is 5572.50)

the finance company have quoted my settlement figure at £3300, i have it at £2200 (give or take a few pounds and pence)

they have confirmed no penalty fees or get out clauses, i am only charged the interest for time of borrowing money. Loan is a HP agreement, Interest was loaded at the beginning so i presume my payments dig away at the balance until paid.

i did receive an email with a letter attached from them with the settlement figure at £2400 but they said it was incorrect

I wish to settle this with the finance company this week but do not want to pay them £1100 extra if i shouldnt have to.

if anyone can point me in the right direction as every settlement calculator online comes out with a different figure. my spreadsheet works everything out but i have a final payment of £278.75 at the end so im finding it tricky to work out the interest/capital split per month so ive just used the total interest figure.

Sazzie23

Sorry no idea, but thought I'd bump the post as no replies yet

January2015

I'm no expert, bu I think if you were only to repay the amount borrowed and interest to date I would virtually agree with your calculation of a settlement figure - I calculate £2,284 based on the limited information given (no interest rate - so I back calculated that from the total loan value, the number of payments and the monthly payment amount.)

However, I think the important statement in your post is

" Interest was loaded at the beginning"

This is an HP agreement and not a personal loan. Therefore it's important to read the T&Cs/agreement you signed to understand how a settlement figure will be calculated.

January2015

I would also request a full breakdown of your settlement figure and not just accept a figure until they do provide a breakdown which will enable you to either understand or challenge the calculation.

thisisarace

thanks for the replies, after speaking with them further they have sent me a amortisation statement showing my new payments which breaks up the principal and interest. (as i have not settled the account yet) I received an account statement from them in Dec showing the balance outstanding. This tallies up with my statement to show how much is owing at any given time.

Period Payment No Proposed Payments Actual Payments Balance

Jan-14 1 £183.75 £183.75 £11,120.00
Feb-14 2 £183.75 £183.75 £10,936.25
Mar-14 3 £183.75 £183.75 £10,752.50
Apr-14 4 £183.75 £183.75 £10,568.75
May-14 5 £183.75 £183.75 £10,385.00
Jun-14 6 £183.75 £183.75 £10,201.25
Jul-14 7 £183.75 £183.75 £10,017.50
Aug-14 8 £183.75 £183.75 £9,833.75
Sep-14 9 £183.75 £183.75 £9,650.00
Oct-14 10 £183.75 £183.75 £9,466.25
Nov-14 11 £183.75 £183.75 £9,282.50
Dec-14 12 £183.75 £183.75 £9,098.75
Jan-15 13 £183.75 £183.75 £8,915.00
Feb-15 14 £183.75 £183.75 £8,731.25
Mar-15 15 £183.75 £183.75 £8,547.50
Apr-15 16 £183.75 £183.75 £8,363.75
May-15 17 £183.75 £183.75 £8,180.00
Jun-15 18 £183.75 £183.75 £7,996.25
Jul-15 19 £183.75 £183.75 £7,812.50
Aug-15 20 £183.75 £183.75 £7,628.75
Sep-15 21 £183.75 £183.75 £7,445.00
Oct-15 22 £183.75 £183.75 £7,261.25
Nov-15 23 £183.75 £183.75 £7,077.50
Dec-15 24 £183.75 £183.75 £6,893.75
Jan-16 25 £183.75 £183.75 £6,710.00
Feb-16 26 £183.75 £183.75 £6,526.25
Mar-16 27 £183.75 £183.75 £6,342.50
Apr-16 28 £183.75 £183.75 £6,158.75
May-16 29 £183.75 £183.75 £5,975.00
Jun-16 30 £183.75 £183.75 £5,791.25
Jul-16 31 £183.75 £183.75 £5,607.50
Aug-16 32 £183.75 £183.75 £5,423.75


the thing i do not get is, as of february if i only paid my normal payments of £183.75 my balance would be 8731.25. So, if i was to clear before march, my settlement should consist of a rebate of interest from march 2015 to the end of the loan date (so im not paying for interest i wont owe as ive paid the money back)

they figure they gave me to settle and the total amount paid (including an additional £3000) is £8871.39 meaning its cost me £3071.39 to borrow £5800 for 14 months?! this seems remarkably high.

The APR on my agreement says rate of interest is 17%PA fixed and says this on my statement but also says APR 33%.

using either of these, i cannot get the settlement figure in my calculations (not even close)

They have told me the interest amount is fixed and calculated at the beginning of the term. (which is slightly different to a loan i have with natwest which each month adds interest on my loan which differs slightly and then shows any payments deducted) my understanding is that this is worked out on compounded interest and the HP agreement is classed as simple interest? does this sound correct

there is no mention in my agreement that i am penalised or charged to settle early.

one thing to mention which may make a difference (this is not in my agreement by the way anywhere)

my amortisation statement says this at the end

— Each payment will be due on the payment date shown above in accordance with the terms of your agreement.
— If your account is in arrears, the arrears are not reflected in the repayment schedule.
— The outstanding balance shown above does not represent a settlement figure for your agreement. If you wish to settle your agreement either in full or in part please contact us on the number shown above.
— The payments will be applied first to any unpaid interest and any balance will be applied to reduce the principal outstanding.
— The interest details shown are calculated using the interest rate prevailing at the date this repayment schedule was produced. Any changes in the interest rates will impact the amount of interest you will pay. The information contained in this repayment schedule is valid until the interest rates are varied in accordance with your agreement.

thisisarace

This is my settlement agreement sent to me just after xmas when i wanted to know how much i owed so i could part ex the car.

this below i would agree with no problem as this reflects the amount owed and a large chunk of rebate for clearing the loan after 1 year.




2/01/2015
Dear Customer(s)
Thank you for your recent request for a settlement figure. Please find below the amount that you will have to pay if you wish to settle your agreement early. If you do not want to settle your agreement, please continue to make your agreed repayments.

Current outstanding balance £8915.00
Less any rebate to which you are entitled £3265.33
Amount required to settle your agreement on or before 30/01/2015
£5649.67

If any repayments fall due between the date of this letter and 30/01/2015, you should make those repayments and deduct the amount of the payments from the settlement figure.
The rebate above has been calculated in accordance with the Consumer Credit (Early Settlement) Regulations 2004 and assumes that settlement takes place on or before 30/01/2015. This date has been calculated in accordance with Regulation 3 of the Consumer Credit (Settlement Information) Regulations 1983.
If you decide to settle the account after 30/01/2015, you will need to contact us for a new settlement figure as your rebate will be reduced.
If payment of the settlement figure is to be made by a third party (eg, a motor dealer from whom you are purchasing a new vehicle) it is nevertheless your responsibility to ensure that we receive the payment.
Yours sincerely

i then made a payment of £3000 as well as my regular monthly payment of 183.75. Now my settlement becomes £3298?! simple maths cannot get this figure

i have the formula from the consumer credit regulations 2004 which the company claim to use to calculate the settlement (sorry if it doesnt display correctly) and the numbers still dont add up to £3298!

Calculation of the amount of rebate
4.—(1) The amount of the rebate is the diVerence between the total amount of the
repayments of credit that would fall due for payment after the settlement date if early settlement
did not take place and the amount given by the following formula—
m n
∑ Ai(1 ! r)ai ∑ Bj(1 ! r)bj
i%1 minus j%1

2where:
Ai % the amount of the ith advance of credit,
Bj % the amount of the jth repayment of credit,
r % the periodic rate equivalent of the APR/100,
m % the number of advances of credit made before the settlement date,
n % the number of repayments of credit made before the settlement date,
ai % the time between the ith advance of credit and the settlement date, expressed in periods,
bj % the time between the jth repayment of credit and the settlement date, expressed in
periods, and
∑ represents the sum of all the terms indicated.
(2) In calculating the rebate, where the creditor so elects, any repayment of credit made at
a time or a rate other than that provided for in the agreement shall be taken to have been made
at the time or rate provided for.

thisisarace

this is the original settlement i got earlier in the week which i was told was incorrect - I accept and agree with this and was even ready to call them to make payment friday for this amount (i actually calculate payment as 2157.83 but i may of included a payment that they dont have yet as my payments leave me on 7th, this was generated on the 9th)

09/02/2015
Dear Customer(s)
Thank you for your recent request for a settlement figure. Please find below the amount that you will have to pay if you wish to settle your agreement early. If you do not want to settle your agreement, please continue to make your agreed repayments.

Current outstanding balance £3953.48
Less any rebate to which you are entitled £1517.98
Amount required to settle your agreement on or before 09/03/2015 £2435.50

If any repayments fall due between the date of this letter and 09/03/2015, you should make those repayments and deduct the amount of the payments from the settlement figure.
The rebate above has been calculated in accordance with the Consumer Credit (Early Settlement) Regulations 2004 and assumes that settlement takes place on or before 09/03/2015. This date has been calculated in accordance with Regulation 3 of the Consumer Credit (Settlement Information) Regulations 1983.
If you decide to settle the account after 09/03/2015, you will need to contact us for a new settlement figure as your rebate will be reduced.
If payment of the settlement figure is to be made by a third party (eg, a motor dealer from whom you are purchasing a new vehicle) it is nevertheless your responsibility to ensure that we receive the payment.
Yours sincerely

thisisarace

this has been resolved now and can be closed/deleted - they looked into it in more detail and the figure i gave was in fact correct.