Santander designed-in inaccurate PCP settlements

Cash_Cow

I haven't put this in motoring as its really to do with finance admin.

I just had a terrible experience with Santander settling a PCP. This is all based upon the fact that they add 58 days interest from the date you ask for a settlement quote. It thus makes no sense to pay the loan back until day 57 - especially if you are consolidating as you will be effectively be paying TWO lots of interest.

We requested in May a settlement figure that timed out on 16/07 and hence paid it all off AS REQUESTED IN THE SETTLEMENT LETTER by going online on the 15/07 and paying by debit card.

The figures in the settlement letter were very inaccurate after 57 days had elapsed and two more payments made as they dont take payments or interest adjustments into account. It was very hard to compare 'live' settlement figures with pre generated ones therefore. Purposefully...?

We then get a 'thanks for settling' letter that shows they added a further 58 days interest from the 15/07 (online settlement payment date). They AUTOMATICALLY do this when you log on to pay off as they recalculate the settlement figures based on the status of the loan on that day. That is unfair and really a purposeful fraud as our loan was to be settled on the original settlement figure supplied and based on 58 days penalty interest from THAT day.

So I followed up with Santander and they suggested a refund of £254 and then revised to £156 based on NOT charging me that FURTHER 58 days interest twice.

They refunded the amount BUT I had to chase them twice as it was seemingly 'agreed' but not 'authorised'. They then send me a letter telling me I owe them £156, I call and get nowhere, they send another letter and I call and get profuse apologies.

I smell something seriously wrong here as they INSIST you settle online as they wont take debit card payments over the phone but then immediately 'auto' add 58 days from that day. What is teh point of asking for a settlement quote beforehand then?:mad:

Does anyone know how I should escalate this apparent fraud to avoid people being stung and especially as most people wont even notice - particularly as ALL these PCP people don't give detailed settlement breakdowns and so you have to 'trust' their figures.

System

It isn't purposeful fraud at all. It is stated in the terms that there is an early redemption penalty.

The loan continues as normal until you pay so of course you're going to have more payments taken out and you are going to have more interest added because until you've paid the loan off it is still live, merely asking for a settlement figure doesn't freeze a loan so of course the figure you were given when you asked several weeks earlier will be different than when you actually decide to pay.

Of course the settlement figure doesn't take future payments and interest into account because they've not got a crystal ball and don't know at what point you intend to actually pay do they?

You are the one at fault, you made the mistake of assuming that everything just got put on hold. The idea of asking for a settlement figure beforehand is to give you an idea of what the payment will be unless you're intending to settle that day.

I cannot see anything wrong other than your failure to understand. The early redemption charge is applied at the time you actually make a payment to close the account.

Cash_Cow

I'm afraid it is you failing to understand. Please re-read.

This is proved as Santander agreed with me and refunded me £156 thus honouring the original settlement date penalty interest 58 day terms rather than starting it from scratch again on settlement day.

There is no point saying 'this settlement quote is valid until x' otherwise is there?

Nearlyold

Early settlement quotes are usually valid for 28 days not 58 days. What was the date quoted by Santander in the early settlement quote they gave you. The fact that they charge 58 days interest does not mean the settlement quote is valid for 57/58 days. You wouldn't have been charged the 58 days twice in any event, the 58 days interest is only added to the current balance when you actually settle, many customers ask for a settlement figure then decide not to settle for various reasons - that doesn't mean that they have an extra 58 days interest to pay each time they ask for a settlement quote. You got a refund because by the time you came to settle you had already made additional payments.

Cash_Cow

You are contradicting everything I say!!! Trust me this is exactly what happened! I have just been through it. The settlement figure quoted online on day of settlement was calculated for that day (inc all repayments and all interest due). I then noticed that they had added a further 58 days interest from the payment date.

I guess the key point here is whether it is fair to apply the penalty interest from date of settlement quote or from actual settlement date.

Them saying this settlement quote is valid until X suggest to me that they cant apply penalty interest twice!!! Otherwise the settlement quote isn't accurate or valid at all is it (other than adjustments for payments made meantime of course)?

For further ref I consolidated two loans at the time and, now aware of the penalty interest part, for a Sainsuburys straight loan I paid this all off bar £50. If I would have paid it all off they would have added a further months penalty interest on a paid off cleared loan. If I left £50 balance in there though via a part payment then it would just auto adjust the next months final payment and there would be NO penalty interest period for early settlement. I preferred that and saved a ton!

Nearlyold

How long did Santander say the settlement quote was valid for (did they specifically state it was valid for 58 days or was that your assumption?) and was there any small print re further payments/ interest charges to be paid? Remember if you request a settlement figure they don't somehow freeze the interest that accrues on a daily basis nor do they add 58 days interest to your balance at that point in respect of the figures on your on line account. I think the figure you saw on line on the day of settlement was your current balance not a settlement figure the 58 days interest charge was added to the balance.

Without actual figures though and details of the loan etc. its not possible to advise further but basically by waiting for two months to settle you paid the two months interest that accrued during that period as you would expect plus the additional 58 days interest Santander are allowed to charge on early settlement (though for technical reasons the CCA refers to its as a reduction in rebate of interest you might otherwise have received as lenders can use a deferred date of up 58 days in calculating the rebate)

Cash_Cow

I can see I'm going to have to scan the letters for you as I'm pretty clear on it and Santander agreed! But I'll do it just in case - I have been wrong once before but that was years ago

Seriously - my understanding is that the settlement figure is valid for 58 days from date of issue in the amount stated - as it said so in the letter. If it isn't valid for a period of time then it is then surely a settlement figure for the day it is issued only...? They add 58 days interest the day you request an early settlement figure and you have until then to pay it off at the quoted settlement amount. Clearly any payments made in the interim should also be deducted and really a small interest amount deduction too.

Cash_Cow

OK Settlement letter 1 dated 22/05/17 valid until 16/07/17 (we paid on 09/07/17).



Settlement letter 2 received AFTER we paid online on 09/07/17 showing it times out 06/09/17 and thus includes interest due until that day.



They honoured the terms of the first letter when I complained. You are saying its absolutely fine to add the penalty interest max amount on day of actual settlement even though you have requested the settlement terms some 50 days before that...and started the penalty countdown timer going.

Nearlyold

Hmm see what you're getting at, just to clarify how much did you pay on 09/07/17, how did you calculate how much was due (if you paid the original settlement amount you would have been in credit by £654) and what was your normal monthly payment (which I assume you must still have made on 03/06 & 03/07) was it £400 per month. Just had a thought - when you went into your online account on the day you settled are you forced or thought you were forced to ask the system for a settlement figure if you did that may be why it was recalculated

Cash_Cow

We paid them £17788.23 on 09/07/17

We got £146 back on August 3d as the second batch penalty interest refund.

2 payments of £400 were made since getting the settlement figure, paid on 5th June and 3d of June July (at 6% - they are £435 now at 3% and a few months longer on the term but it kills the £8k balloon :-) )

They wont take the payment over the phone and insist you do it online - which is fine as it does extra security checks. But it seems to by default recalculate that penalty period and of course if it is doing that to EVERYONE who had obtained a settlement figure earlier (and like us were making sure we weren't paying two lots of interest on the 'same' money when consolidating...) then its a bit off, to say the least. There is no "I have obtained a settlement figure prior to logging in" facility.

Nearlyold

It seems to me the problem arose because somehow or other you requested a settlement figure either by accident or default when you logged into your account to make your payment. The system would not be aware you were merely asking for an updated settlement figure that took into account the monthly payments you had made since you received the original settlement letter. It would not be unusual for a number of settlement figure requests to be made over a period when a customer was thinking of changing their vehicle these could be from either the customer or a dealer. Dealers also ask for them as part of prospecting before they contact customers to see if they can "get them into" a new vehicle.
On the Santander finance site a number of other methods of payment appear to be available which don't appear to require logging in to any account see:- https://ficresuk.santanderconsumer.com/FicresOCardPayment/app/SelectPaymentMode.aspx