Hire purchase - high settlement statement

kropaske

Hi All,
I took van on hire purchase agreement in march. Loan was £9317 at 6.27% for 60 months, interest £2921, monthly payments of £203.98, final purchase fee £1.
I have paid 3x instalments so total £611.94. Today i requested settlement statement and they sent one as follow: 

Amount payable to settle agreement (before any rebate) - £11,627.86
Amount of rebate (if any)* - £2,191.43

Settlement figure** - £9,436.43       (so i need to pay more than i borrow despite paid already £611.94)
Surely something is not quite right here. Terms and condition said that they calculating this figure according to consumer credit (early settlement) regulations 2004 which i read that uses actuarial method. I've type my figures to some online calculators but figures varies from £8700 - £9100 but no way near £9400.
So the the questions are: 
Could someone run the numbers again?
Did they calculate correctly?
If so is there anything i can do to make this work better (pay less interest) for example make overpayment first and ask for another settlement statement - will that even work?
Should information about this be included in the contract?
Thanks
Lucas  

 

DrEskimo

Is the 6.27% the flat rate or the APR? Using your figures I get an APR or 11.9%.

Does the terms mention any early settlement fee?

TadleyBaggie

Almost certainly due to 60 days interest being added on as per the T&C's for early redemption.

kropaske

According to contract its fixed for duration of the loan. No early repayment fee except £1 option to purchase fee. 

[Deleted User]

You need to check the full agreement for the early settlement charge.

That should also show the APR,rather than the flat rate shown here.

kropaske

That's all they gave me. It seems that there is page 2/2 missing which i requested that so hopefully i will post it back when received.
I am pretty sure there is no early repayment charge except for £1. I did ask about that as i knew i will pay back few month after purchase.

DrEskimo

Top of page 1

'non-regulated fixed rate Hire Purchase Agreement'

You're quite lucky they are not asking for the entire amount payable back....

kropaske

Here is the full terms and conditions. Clause 9.1.3 mention about calculating final payment.
"...in each case reduced by a rebate (if any) calculated in accordance with our usual formula "fairly" to reflect the early receipt by us of funds..."
So they don't tell me the formula but they tall me they will calculate "fairly" but that can mean anything its certainly not "fairly" to me.
Is it worth to complain and take it further or should i just pay and forget and NEVER TRUST THE SALESMAN again.

Nearlyold

If the lender has calculated the rebate of interest in line with the 2004 Early Settlement Regulations then you will have a hard job arguing the interest charge is unfair as the Regulations themselves clearly allow a  calculation method which will result in this charge.

To explain -
When a customer requests a full or partial early settlement the lender has to calculate a rebate of interest charges that would have otherwise been charged if the loan had continued as before. In calculating this rebate the assumed date of the full or partial early settlement can be set up to 28 days after the request or 58 days after (at the lenders discretion) if the loan has more than 12 months to run.
The customer then has 28 or 58 days in which to make the payment, if they make the payment earlier than the 28 or 58 day deadline the lender does not have to adjust the rebate of interest calculation already made, the customer is simply giving the lender some free working capital for a period. If you check your Settlement Calculation letter you should find the lender has given you a figure which is valid for two months.
NB The lender is always free to offer more generous terms than specified in the early settlement regulations - as some do of course

kropaske

It seems that they did calculate in line with 2004 ESR but i only got 14 days to pay, does that make any different?

Nearlyold

Other than in the Settlement Letter are the 2004 ESR referenced anywhere else in your paperwork - I couldn't see one but my old eyes are not too good at squinting at small print? I'm wondering if the ESR paragraph in the settlement letter has been added in error, on a debt of £9,000 at 12% pa the interest would be approx £90 a month so would expect the interest rebate under ESR to be higher than in your letter (by around £280). I suggest you ask Moto Novo for clarification. At the end of the day you (on behalf of your Ltd company) have taken a Non Regulated Finance product so your complaint options are somewhat limited - with no access to FOS and no requirement on the lender to use the ESR to calculate the interest rebate or even give any interest rebate at all.