Settling Logbook Loan early - Autoadvance

Gaz83

At an APR of 226.47%, your repayments of £214.18 wouldn't even cover the interest. Each month 226.47%/12 (18.8725%) would be getting added onto your account. 18.8725% of £1,900 is £358.58. Your balance would be going up.

foxy-stoat

http://www.whatsthecost.com/loan.aspx

105.5% is the figure that it nearly works out to.

There must be fix set up fees that they havent told you about.

DizzyExponent1

Thank you for all the replies it is much appreciated

Surely then they are charging me less interest than the contract states they should be? I am not sure how to take this further as I am not very good with these sorts of things?

[Deleted User]

I think the best thing is for you to contact them and ask for written confirmation of amount borrowed, any additional fees, rate, term and how the settlement figure is calculated.

There's too much conflicting information at the moment.

Stuart107

Looks like the 69% is just a flat (fixed) rate loan...

Have read through my loan agreement, there is nothing in there at all about any up front charges etc all it says is amount of credit is £1900 and total charge for credit is £1966.58 repayable over 18 months.

At 69% for a flat rate loan the total interest is calculated from the initial loan amount not on a reducing balance so the total is:

£1900 * 0.69 * 1.5 = £1966.50

So the 69% is not APR but the fixed rate -- as beloved of car dealers everywhere! There's an explanation of the difference on this site http://www.moneysavingexpert.com/banking/interest-rates#FLAT

I'd still request a breakdown of the repayment figure but an APR of a 105-ish% is 6.22% per month so the 2-months for early cancellation would be £236.

DizzyExponent1

Ok I emailed them and this is the breakdown response I received:

Therefore the settlement breakdown is as follows:

Total repayable: £3866.58
Payments Received to date: £214.82
Current Balance: £3651.76
Repayment fee: 0.00
Rebate Of Interest: £1165.30
Settlement Figure: £2486.86
Principle Outstanding: £1821.75

The actual settlement generated by our system is highlighted above. This figure is calculated in line with the Consumer Credit (Early Settlement) Regulations 2004, which we have attached for your information.

Each monthly contractual payment is split between principle and interest. Over the course of the credit agreement term this proportion varies, resulting in a larger proportion of the instalment allocated towards interest in the earlier stages of the loan, much like with a repayment mortgage. For example, your last instalment of £214.81, is allocated £136.57 to outstanding interest and £78.24 to principal. I appreciate that, the above explanation aside, the fact that the settlement figure is higher than the original amount borrowed is difficult to understand. This is mainly due to how interest is rebated from the total repayable under the contract, rather than applied to the outstanding principle.

Guess there is not a lot I can do and will have to pay this settlement figure?

foxy-stoat

So they charged you £136.57 interest in the first month?

What was the date you received payment and date you asked for the settlement figure?

foxy-stoat

http://www.legislation.gov.uk/uksi/2004/1483/regulation/4/made

This is the calculation that they should of made, I do not understand it but someone may do !

DizzyExponent1

I just assumed as they said there was no early settlement penalties I would just pay the principle + any interest accrued for the period I held the loan but obviously they work it out differently

Considering my outstanding principle is £1821.75 at present £2486.86 is a huge amount to have to pay to settle it

iolanthe07

Principle Outstanding: £1821.75

I wouldn't trust a company that doesn't even know the difference between "principal" (correct in this context) and "principle" (incorrect in this context).