BMW FS Settlement Figure

AM1987
AM1987 Posts: 9
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edited 18 January at 5:51PM in Loans
Hi, 

I need some help from someone who is experienced with PCP. It’s my first ever time and I can’t seem to agree with my settlement figure from BMW.



I purchased my car in June 2023. I have made 8 payments of £703.31 to January 1st which total £5,626.00. 

I have requested a settlement figure today to settle the finance on the car and it’s coming out at £35,711. That seems quite high to me considering I’ve made payments of £5,626 and only reducing the capital I owe on the car by about £2k? Is it right that I’ve paid over £3k in just interest.

There is no charge for early repayment in my contract.

im just wondering if this is correct before I part ways with £35k. The consultant on the phone wasn’t really much help and basically said the system pulls the number together. 

Any advice or feedback would be really helpful as it’s really bothering me how I’ve paid so much but only so little has contributed to the capital of the car 

thank you

Comments

  • TadleyBaggie
    TadleyBaggie Posts: 5,940
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    As with any loan, at the start of the term most of the payment is servicing the interest and not the capital. So it doesn't sound obviously wrong.
  • MorningcoffeeIV
    MorningcoffeeIV Posts: 1,915
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    Yep, that all seems bang on.
  • AM1987
    AM1987 Posts: 9
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    Ok fair enough. Doesn't appear right to me but what do I know.

    thanks for your feedback. I’ll get this paid off
  • molerat
    molerat Posts: 31,565
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    edited 18 January at 7:52PM
    A rough calculation.
    You effectively have 2 loans. 
    An interest only loan for the balloon payment of £15598.61 which carries interest of around £141 per month
    A repayment loan of £22151.39 repaying at £562 per month. £141 + £562 = £703
    After 8 payments the repayment loan has £19200 outstanding (just under £3K has been paid off the capital), the interest only loan is still fully outstanding.
    To settle there will likely be 2 months interest penalty so 2 x (141 + 177) = £636
    £19200 + £15598 + £636 = £35434 so not a million miles off their amount.
  • lopsyfa
    lopsyfa Posts: 472
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    A rough calculation:

    Month 1, interest = 37750*0.109/12=£342.90, Balance =37750+342.90-703.31=£37,389.59
    Month 2, interest = 37,389.59*0.109/12=£339.62, Balance =37,389.59+339.62-703.31=£37,025.9
    Month 3, Balance = 37,025.9*(1+0.109/12)-703.31=£36,658.91
    Month 4, Balance = £36,288.59
    Month 5, Balance = £35,914.90
    Month 6, Balance = £35,537.82
    Month 7, Balance = £35,157.31
    Month 8, Balance = £34,773.35
    If your last payment was January first, 1st -18th January interest needs to be accounted for =£186.92. Also, as above, they are allowed to charge two months interest for the settlement =£631.71

    So rough settlement figure = £34,773.35+186.92+631.71=£35,591.98

    Which is not far off the settlement figure you are quoted considering I have assumed all months have equal days in my calculations and that your first payment comes out exactly a month after taking the PCP.
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