Car finance help - Payment holiday and late charges

ryan92

Hey,
Just looking for a bit of advice with this one.
Back in April 2020 I request a 3 month payment holiday for my car finance - I pay £247 a month. I was advised by the company to cancel my DD and this would be restarted under the new terms after the 3 month payment holiday was finished.

I have today received  my Annual Statement and have found the following that I am a little unsure about ; 

• 27th April - Direct Debit £247  ; 28th April - Direct Debit Cancelled - £10 letter charge.
• 30th April - Reschedule charge £846
• 30th April  - £257 manual payment
• 27th May - No payment
• 27th June - No Payment
• 26th July  - £247 manual payment
• 30th July - £247 - payments restarted.

Looking at the above, it appears I only had 2 months out of the 3. Things were stressful around those times so when I was advised I had to pay again from July onwards, I had obviously assumed that was the 3 months up. I had queried with them why my DD was not showing on my internet banking as being restarted and they advised me it was suspended and to make a manual payment in July to cover that month's payment.... only for the DD to then come out a few days later.

I can't help but feel a bit 'ripped off' if that's the right word. I do understand there had to be a reschedule charge for interest for the deffered payment, however given a payment was made in April and then a double payment due to an error in their advice would I be wrong in requesting that to be recalculated. I have contacted them regarding this however still awaiting a reply and the phone lines are consistently busy.

If it stands, it stands, just looking for some expertise that's all

Cheers!

AdrianC

That looks to me like you didn't "miss" any payments.

28/4 - payment 1 due, payment 1 made
30/4 - payment 2 made
27/5 - payment 2 due
27/6 - payment 3 due, no payment made
27/7 - payment 4 due, payment 3 made
30/7 - payment 4 made

So that's four payments due, four made. One was a month early, one was a month late.
And they've charged you £846 + £10 for that?

Or am I misunderstanding you?

ontheroad1970

The OP was meant to have been granted a 3 month payment holiday.  

ryan92

Sorry for any confusion. My payment on the 27/4 was reversed because I was told to cancel my direct debit. So I manually made the payment for that month on the 30th April.

So I had paid in April and then the next payment was in July which was a double payment due to incorrect advice from the company. 

With the agreement, the interest was added as a lump sum at the beginning of the agreement so I’m not charged interest monthly. Even with the 3 month payment holiday, would that not have just extended the term by 3 months rather than accrue 3 months worth of interest?

NottinghamKnight

ryan92 said:

Sorry for any confusion. My payment on the 27/4 was reversed because I was told to cancel my direct debit. So I manually made the payment for that month on the 30th April.

So I had paid in April and then the next payment was in July which was a double payment due to incorrect advice from the company. 

With the agreement, the interest was added as a lump sum at the beginning of the agreement so I’m not charged interest monthly. Even with the 3 month payment holiday, would that not have just extended the term by 3 months rather than accrue 3 months worth of interest?

You don't appear to have had a 3 month payment holiday in that case.
More importantly adding interest as a lump sum at the beginning of the contract is not correct and probably illegal, this is where the flat rate method quoting finance comes from, and means you are paying interest on money you have already repaid if what you are saying is correct. A rule of thumb is that an APR is pretty much half of a quoted flat rate. It may be that they have simply quoted a total figure for interest over the life of the loan which is fine.

born_again

Double check you bank statements & see how many payments went to to pcp co since April.

Grumpy_chap

ryan92 said:

With the agreement, the interest was added as a lump sum at the beginning of the agreement so I’m not charged interest monthly. 

Front loaded interest is no longer allowed.  Do you mean they showed the total that would be due, assuming the loan runs to plan, by showing the predicted interest from the outset?

ryan92 said:

Even with the 3 month payment holiday, would that not have just extended the term by 3 months rather than accrue 3 months worth of interest?

I don't think you said whether it is a loan, or PCP.  Simply extending the term is not always easy with all types of car finance.
If you take three months without making payments, the interest charged in total will increase, unless you make some other "correction" later on.

ryan92

Hey sorry, I've not been too clear, my bad!
The finance given was £9000 but the starting balance was £14k or thereabouts. 60 months.
Looking at my bank statements, the dates and values I mentioned above show on there too so the statement I received from them matches the payments that were made.

Grumpy_chap

You borrowed £9k.
The total interest, if you simply run to term, would be £5k
Term 5 years.
So the balance shows at the start of the agreement as £14k.  Every time you make a payment, that balance reduces by some of the original £9k plus some of the anticipated £5k interest.
If after, say, 6 months, you had paid a lump sum of £3k that would be £3k off the £9k.  The remaining interest would then be rescheduled.  The total interest over the term would then reduce by a large amount because the lump sum was paid so early, say, £2k off the total interest would mean that the balance would show as £9k.

ryan92

Ah that does make sense. It's also a HP plan ; you did ask that and I forgot to answer.
I'm still awaiting on them getting back to me about the query though ; they are a nightmare to get a hold off but I completely understand that at the moment, it can't be helped!

Grumpy_chap

For a specific example, I had finance last year for £6k, the total repayable would be £15k, but I made a £2k overpayment early on and it reduced the "balance" by over £8k.