Hire purchase - high settlement statement

MinuteNoodles

DrEskimo said:

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?

It's a fixed flat rate interest looking at the agrement posted so that would be the same as an 11.9% APR with any other lender. If they'd have seen that I bet they'd have tried finance elsewhere.

kropaske

Nearlyold said:

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. 

No 2004 ESR mention anywhere else.
Does that mean they can calculate rebate however they like and I can't really complain? 
None of that obviously been explained by the salesmen because if it was I would never sign up for this kind of loan knowing I'll be paying it off in full within 4 months. It would not make the difference if I keep it till the end as I would knew total amount of interest to be paid. 
I am going to ask for full calculation anyway and post it here but looks like I just need to pay it and forget about it

Nearlyold

This is how rebates are calculated:-

Calculation of the amount of rebate

4.—(1) The amount of the rebate is the difference between the total amount of the repayments of credit that would fall due for payment after the settlement date if early settlement did not take place and the amount given by the following formula—

where:

Ai =the amount of the ith advance of credit,

B=the amount of the jth repayment of credit,

r=the periodic rate equivalent of the APR/100,

m=the number of advances of credit made before the settlement date,

n=the number of repayments of credit made before the settlement date,

ai=the time between the ith advance of credit and the settlement date, expressed in periods,

bj=the time between the jth repayment of credit and the settlement date, expressed in periods, and

Σ represents the sum of all the terms indicated.

kropaske

Nearlyold said:

This is how rebates are calculated:

Yes, thank you for that.
I did found it and when i run the numbers the settlement figure came at £9004 and rebate is £2623.
This is calculated using APR of 11.9% - correct?
Hopefully they send they calculations next week...

kropaske

Quick update, spoke with them on the phone today to request calculation but they refuse claiming they calculate in line with industry standards. Also she briefly spoke with manager and he said because its a bussines they use Rule of 78 and that allows them to add up to 6 months of intrest? 

DrEskimo

I think you need to look into the implications of having an unregulated agreement when it comes to early settlement.

From my brief reading, you have very little, if any, come back with respect to early settlement charges.

I would settle it and chalk it down to experience. It's not uncommon to have to pay all outstanding interest and a fee in these agreements so you haven't done too badly....