Please help calculate loan settlement figure

KLS0817M

I am in dispute with Hitachi as I believe the settlement figure they have given me is incorrect.
I thought I was in a position to settle the loan until I contacted them... could you please help me work out what it should be? I don't even have a copy of the original agreement, I don't think they ever sent it to me. I thought my interest rate was higher but I have just dug out an annual statement which tells me that the interest rate is 30.75% (Still high I know, but I had no other options at the time)

Loan: £4,500
Duration: 60 months
Interest Rate: 30.75% per annum
I have made 16 monthly payments of £190.32

Could anyone please tell me what they think the settlement figure should be? I've looked at how to work it out online but my maths just isn't up to it.

Thanks in advance

[Deleted User]

Somewhere in the region of 3k.

TrickyDicky101

I agree with zx81 - c.£3,039 (without any fees/early repayment charges).

I make it that with your quoted figures you should have had a monthly payment of £147 and not £190 though - did you have a payment holiday at the start of the loan that might account for the difference?

KLS0817M

I am confused by that too now. I did not have a payment holiday.
I don't know if the interest rate stated on the annual statement is incorrect because I did have a feeling it was higher but I don't have anything in writing stating a higher interest rate. When the loan was agreed I received a summary by email which just told me what my monthly payments would be, it doesn't have the interest stated on there.

TrickyDicky101

What have they told you your settlement figure is? They can charge up to 56 days' interest I think for early settlement and that will be c.£150 so if they are giving you a settlement of £3200 or thereabouts it looks more or less correct.

Pixie5740

Is there PPI on the loan because I calculate the monthly payments to be circa £140 too?

JimmyTheWig

The interest is 30.75% flat rate, rather than APR.

Pixie5740

Ah, so it is a flat rate of 30.75% which I then calculate the APR to be 45.25% if the monthly repayments are £190.32 meaning that after 16 months there is just over £4k outstanding.

KLS0817M

The figure they have given me is £4520.13
It says 30.75% per annum so isn't that the same as APR ? What does flat rate mean?
Thanks for your help!

PeacefulWaters

KLS0817M wrote: »

The figure they have given me is £4520.13
It says 30.75% per annum so isn't that the same as APR ? What does flat rate mean?
Thanks for your help!

Flat rate is a terminology that doesn't take into account reducing balance as the loan progresses. A £1,000 loan requiring £100 a month repaid over a year would have a flat rate of 20%, representing £200 interest on a £1,000 loan. In reality, as your average balance across the year is c£600, not £1,000, the true interest costs are much higher than the misleading flat rate.

In my view the use of flat rate should be outlawed. APR exists to provide true cost comparison between credit providers.

KLS0817M

Right I see, thanks for explaining.
It just baffles me that I have been paying nearly £200 a month for 16 months and in order to settle they still want me to pay more than I even initially borrowed, it feels like loan sharking
I was expecting it to be more like £3.2k by now.. My partner thinks we should write to ombudsman because it just doesn't feel right, but I wanted to get all the advice I could before heading down that path. Otherwise I guess I'll just have to plod along paying the monthly until I've saved more but it's hard to save with such a large monthly outgoing.
Do you know what would happen if I were to pay a chunk of it off? Is it possible to pay £3k now, and how would that affect my monthly payments?
I know I should just phone up again and ask them these questions but it's soul destroying, they don't have the best customer service and I'm only looking for rough advice on here.