loan settlement higher than originally borrowed

KLS0817M

I borrowed £4500 over 5 years and repayment was set out at £190.32 per month for the 60 months as the APR was about 46% (yes I know, stupidly high, but we were pretty desperate at the time). It is with Hitachi personal finance. Anyway I am in a position to pay it off now, or I thought I was until I received the settlement figure.

On 10/11/16 loan was granted and received
On 10/12/16 I made the first payment of £190.32
After 15 payments totalling £2854.80 I have been given a settlement figure of around £6200 (Can't remember exact figure as it was over the phone and I was shocked).
I've asked them to escalate and recalculate as I feel there is some mistake but in the mean time I just want an idea of where I stand, if anyone can help.
I don't understand how the settlement figure can be a penny more than the original amount I borrowed. I'd understand if it were not much less than original due to high interest but how on earth can it be higher? In my head that logic means that the monthly payment hasn't even covered the monthly interest or else wouldn't some of the principal have been paid off Too? I thought that with an unsecured loan some of the principle had to be repayed each month?

I don't think I have PPI, certainly not aware of it.
I have never missed a payment or been late.
There was no holiday period at the start
T&Cs don't mention any charges or penalties for early repayment so I'm at a loss.

Can anyone shed some light?
If you think it's wrong what do you think the settlement figure should be?
And how do I appeal this ? They were quite adamant on the phone.
Any help is much appreciated

GM1880

It!!!8217;ll no doubt be in the small print, I suspect there!!!8217;ll be some sort of early redemption penalty in the credit agreement.

By making the agreement they!!!8217;re making a considerable sum off you over the course of the contact to the tune of about £6000 by my rudimental sums over and above the sum borrowed. By paying it back early even if you were ok with a settlement of £4500 they!!!8217;d only make c.£2400 so it!!!8217;s understandable they!!!8217;d try to !!!8216;encourage!!!8217; you not to pay off early.

Makes sense the figure is that high, though not pleasant.

Ultimately read through the credit agreement first as see if it!!!8217;s covered in there.

Tom99

Yes there should be an early redemption clause somewhere in the credit agreement which you need to find

bazzyb

Are you sure you specifically asked for a settlement figure? It sounds like you have been quoted your outstanding balance, i.e. how much you left to pay if the loan runs full term which is quite different to your settlement figure.

Also if you took the agreement out online you should have access to Hitachi's online system which will show you both the outstanding balance and the settlement figure.

Nearlyold

As bazzyb says you and Hitachi have got your wires crossed somewhere. The early settlement regulations for consumer loans sets a maximum early settlement fee of two months interest, it should not be possible after 15 months payments for the settlement figure to be £6,200. Your settlement figure should be about £4452 - still high but then the two months interest charge is £317 and you've been paying less than £35 off the capital each month the rest being interest.

PixelPound

If you plug the figures into a calculator, that repayment amount would mean APR between 45.42% and 45.4% (which is your about 46%)
So based on the middle of that range then after 15 payments your balance would be £4128. Normal early redemption is 2 months interest i.e. crudely 45.43/6 and so 7.57% added to £4128 gives £4440.49

Strange how they got that figure, Over 60 months you would have paid £11419.20, so after 15 payments you'd still have £8.5K to pay so the figure can't be total payments left.

It may be that they charge a fee, though their website does state no arrangement fees or hidden fees.

Have you had written notification of the settlement figure? Just in case you misheard the figure you can't remember exactly. That settlement figure will show current balance settlement interest and total to pay with a date to be paid by.

[Deleted User]

I didn't think Hitachi offered loans with that high an APR?

[Deleted User]

camelot1971 wrote: »

I didn't think Hitachi offered loans with that high an APR?

They may have done in 2016 - current maximum rate on home improvement loans is 28.8% APR