Car finance deferral APR

adamr85

At the start of the pandemic I contacted my finance provider, motonovo as they offered payment deferrals for their finance agreements. It was made clear that there would likely be two options at the end of the agreed ‘payment holiday’; pay the arrears in one payment after the deferral period or pay it back over a longer period along with the rest of my finance. At no point was interest or apr % or anything of the like mentioned/discussed/disclosed.

so it was my shock today to receive an email explaining that I had two options. Pay back the arrears in full, or pay them back over an extended period but pay 12.12% apr. 

Upon ringing and complaining they explained that any deferred payments would be subject to this as per my original contract I signed when taking out the finance and that they did not need to disclose this information prior to my COVID-19 payment holiday agreement. Is this correct? Can I fight it? Is this legal? Any advice would be much appreciated.

thanks 

bigadaj

Don't understand why you assumed it would be interest free. Mr. Lewis has made this point about any payment holiday, be it loan, mortgage or car finance, continually and said only take it if you need it, if the interest rate isn't any higher then don't know why you would complain. Are they offering you the option of paying back now with no interest incurred for the deferral period as that would be decent result for you?

neilmcl

Did you check?

Of course interest is going to be charged on the deferred sum if you choose not to pay it back straight away, I think you're being unreasonable to expect anything different. All the information regarding deferred payments is on their website to view.

Garner1967

Hi i have deferred my HP on car for 3 months which is coming to a end ,as im still not back fully to work im thinking if pos to extend for a further 3 months, but i,ve paid over half of agreement, so am i able to still voluntary terminate contract and hand car back,which may be the best way, thanks steve

Mercdriver

adamr85 said:

At the start of the pandemic I contacted my finance provider, motonovo as they offered payment deferrals for their finance agreements. It was made clear that there would likely be two options at the end of the agreed ‘payment holiday’; pay the arrears in one payment after the deferral period or pay it back over a longer period along with the rest of my finance. At no point was interest or apr % or anything of the like mentioned/discussed/disclosed.

so it was my shock today to receive an email explaining that I had two options. Pay back the arrears in full, or pay them back over an extended period but pay 12.12% apr. 

Upon ringing and complaining they explained that any deferred payments would be subject to this as per my original contract I signed when taking out the finance and that they did not need to disclose this information prior to my COVID-19 payment holiday agreement. Is this correct? Can I fight it? Is this legal? Any advice would be much appreciated.

thanks 

What is the APR on your agreement?

lopsyfa

If the interest is accrued at the same interest as your original agreement, then this is normal and you have no complaints. Interest on most loan is accrued daily and by deferring the payments your balance will be higher than it would have been. The interest will be as a result of applying interest on the higher balance. There is no extra interest applied here - it is just the way loan/finace worked. As already mentioned, you now need to pay the extra interest and the deferred amount and you have two options - pay it off in one go and keep your currently monthly payment (the cheapest) or by amortizing it over a period of months (possibly to the end of your agreement). The second option means you pay interest on the interest (compound interests) and end up paying a lot more.

If however, your original loan is at a different lower APR than 12.12%, I believe they should have informed you when you take out the holiday and you can only ask them to reduce it to the APR of your agreement not 0%.