Early Settlement Figure help

A_N_R

I have a Mercedes HP finance agreement which I have ended early after just 40 days. It was a 48 month term at 5.9%. The settlement figure given by Mercedes is around £365 more than I work out and they cannot give me any workings or tell me why.

My workings are as follows: original amount to finance £45,168 + 40 days interest £292.05 + cost to cancel fee £10 - I have made a first payment of £1,056.22 = £44,413.83.

Mercedes have charged me £44,779.09 to end the agreement.

Any help would be greatly appreciated!

Ebe_Scrooge

They should be able to give you a precise breakdown.  But a quick back-of-a-fag-packet calculation suggests there may be 1 month's worth of interest added as an early settlement penalty, plus the £10 fee?

A_N_R

I have escalated this to Mercedes and the explanation received was that the early settlement quote is valid for 30 days and includes 30 days of interest (despite paying after the second day) and they also charge a further 28 days of interest, so 58 days in total of interest for paying up early. Is this normal/allowed? Thanks

Ebe_Scrooge

A_N_R said:

I have escalated this to Mercedes and the explanation received was that the early settlement quote is valid for 30 days and includes 30 days of interest (despite paying after the second day) and they also charge a further 28 days of interest, so 58 days in total of interest for paying up early. Is this normal/allowed? Thanks

As long as it was stated in the contract you signed, then yes.  It's not at all uncommon to charge an early settlement fee, and 2 months' interest is a fairly standard amount.