PCP Calculations - Early settlement

Nearlyold

zagfles said:

gizz_10 said:

Mutton_Geoff said:

gizz_10 said:

They have given the settlement date as 13 January 2023.

That is almost 3 months you will have had their money, not 6 weeks mentioned. Stick the £17,500 in the highest interest instant access account you can find tomorrow (Aldermore at 2.75%) and earn another £80 in interest to offset your losses before paying off the loan. This reminds me of my stoozing days, if you're going to play the game you need to know all the rules that will apply as it's easy to get bitten.

Not quite, I had not intended to hold their money for 3 months. Even if I paid it all off today,  the settlement amount is still the same - ie 58 days extra interest as they are calculating until 13 January regardless if I pay it off today or any day until 13 January. The extra 58 days interest when I have already paid them back is the issue here, especially as it was not mentioned and is not included on any of the documentation and was not even mentioned when i queried it within my 14 days cooling off period - it was clearly stated I would only pay interest for the period i had the loan.

My money is already earning 2.75% interest thanks - but as I am interested in reducing the amount I will pay Santander - is there some merit in paying some off, getting them to recalculate my interest on the lower amount, then requesting the settlement amount - it will be lower right? 58 days interest on a lower amount would be lower right? Or does it not work that way?

As above, see https://www.legislation.gov.uk/uksi/2004/1483/made

It looks like they're entitled to delay the settlement date 58 days.

If you exercise your right to withdraw from the finance agreement within the first 14 days (A right introduced under the European Consumer Credit Directive 2010) it is correct that you only have to pay interest for the period the loan has been in force plus the amount borrowed, it has to be repaid within 30 days and once you have notified the lender you wish to withdraw you cannot change your mind

Beyond the 14 day right of withdrawal you have the right to make a partial or full settlement of the loan, the right to full settlement has been around for decades, the right to partial settlement was introduced under the same directive that introduced the right to withdraw. 

For either full or partial settlement beyond the initial 14 day right of withdrawal window the lender is entitled to postpone the assumed date of the settlement calculation by up to 58 days for loan terms > 12 months or 28 days for loan terms < 12 months.
Some lenders only apply the 58/28day postponement to full settlement but are perfectly entitled to apply the rules to partial settlements.

Although your credit agreement may not specifically mention 58 days or 28 days it will state something along the lines of.  
................  Early Settlement will be calculated in line with the Consumer Credit (Early Settlement) Regulations 2004. 

It should be noted that the legislation regards the result of the post-dating calculation as a reduction in the rebate that would otherwise be due rather than a penalty.

sheramber

The devil will be in the detail.

If you asked within the 14 day period did you make it clear you would be settling after one month, not within the 14 days?

CS will only answer what you ask. 

 he told me I could then cancel it after a month

but didn't mention anything about interest?  

gizz_10

sheramber said:

The devil will be in the detail.

If you asked within the 14 day period did you make it clear you would be settling after one month, not within the 14 days?

CS will only answer what you ask. 

 he told me I could then cancel it after a month

but didn't mention anything about interest?  

He said I would only pay a month's worth of interest

ev51

You have been misled by CS.

I early settled SCF PCP after 6 payments and did indeed pay 58 days "interest" for the defered period as per the document SCUK-Settlement-Figures.pdf:

Calculation
The early settlement calculation contained in the Consumer Credit (Early Settlement) Regulations 2004 means that we defer the proposed settlement date by 28 days from the date of your request on an agreement that had an original term of 12 months or less, and by 58 days on an agreement with an original term of greater than 12 months.

Your settlement figure letter will have included the following:

In terms of how your settlement figure is calculated we adhere to all relevant legislation, specifically:
1. The rebate shown has been calculated under the rules laid out in the Consumer Credit (Early Settlement) Regulations 2004 and is based on the assumption that early settlement takes place on the Settlement Date.
It also assumes that payment will be received by us no later than the Settlement Date. If no rebate is shown, there is no entitlement to a rebate under Section 95 of the Consumer Credit Act 1974 or under your agreement. You can, if you wish, pay us the settlement figure before the Settlement Date.
2. The Settlement Date has been calculated in accordance with Regulation 3 of the Consumer Credit (Settlement Information) Regulations 1983.
3. You can obtain general information about the operation of the Consumer Credit Act 1974 and its regulations from the Financial Conduct Authority, 12 Endeavour Square, London E20 1JN. Advice may also be obtained from your local Trading Standards Department or nearest Citizens' Advice Bureau."

I can't see Santander giving way on this, you will just have saved a bit lesson the deal than you anticipated...