Car Finance Agreement Error?

Dan30718

Hi folks, 
hoping someone can give me a little advice on the below.

Agreement states I am on Hire Purchase agreement, which to my knowledge unlike a PCP- don’t typically or ever come with a final balloon payment. 

My issue is I pay £240.83 per month on a 4 year deal, which comes to an end this Nov/Dec. 

By my calculations £240.83 x 49 months of the agreement, as stated on the paperwork, gives a total of £11,800.67. 

This doesn’t even cover the actual cost of the car itself at £12,900

any idea what has happened here or where I stand come the end of this agreement? 

Thanks in advance! 

Nearlyold

There is no error. There's no Regulatory definition of a PCP. PCPs are simply modified versions of a standard Hire Purchase Agreement or Conditional Sale or Fixed Sum Term Loan.

Yours is based on a Hire Purchase which is why the paperwork says it's a Hire Purchase Agreement.

Lenders cannot use Personal Contract Purchase as the title of your Agreement because it has no official legal definition it's just a marketing name.

Dan30718

Nearlyold said:

There is no error. There's no Regulatory definition of a PCP. PCPs are simply modified versions of a standard Hire Purchase Agreement or Conditional Sale or Fixed Sum Term Loan.

Yours is based on a Hire Purchase which is why the paperwork says it's a Hire Purchase Agreement.

Lenders cannot use Personal Contract Purchase as the title of your Agreement because it has no official legal definition it's just a marketing name.

Thanks for the reply. 

My issue is there’s going to a large amount outstanding come the end of my agreement. And absolutely no where on my paperwork does it state that I have a final balloon payment to make, how much it is or anything of the sort. 

According to my agreement they have asked me to make 49 payments of £240.83… and that’s it? Or am I picking something up wrong? 

Ayr_Rage

@Nearlyold there is a MAJOR issue.

The OP will not have paid the required £16501.89 at the end of the contract if they are only paying £240.83 over 49 months !

The option to purchase fee is showing as only £1 so either that is wrong or the OP has been paying an incorrect monthly amount.

Dan30718

Ayr_Rage said:

@Nearlyold there is a MAJOR issue.

The OP will not have paid the required £16501.89 at the end of the contract if they are only paying £240.83 over 49 months !

The option to purchase fee is showing as only £1 so either that is wrong or the OP has been paying an incorrect monthly amount.

I may not have explained myself or the suspected issue very clearly so apologies to the first responder! But yes, this is exactly my concern and belief. 

TadleyBaggie

There seems to be some error in the calculations, according to MSE loan repayment calculator (if you assume the quoted rate is APR), the rough figures should be:

In total, over the 49 months of your loan, you'll repay £14,844
£1,891 in interest 
£302 in monthly repayments

Therefore I suspect the 6.71% rate is actually the flat rate, which would almost double the APR. Using a flat rate calculator, that appears to be the case, however to pay off the loan would require monthly repayments of around £336.

Nearlyold

Ayr_Rage said:

@Nearlyold there is a MAJOR issue.

The OP will not have paid the required £16501.89 at the end of the contract if they are only paying £240.83 over 49 months !

The option to purchase fee is showing as only £1 so either that is wrong or the OP has been paying an incorrect monthly amount.

The Option to Purchase Fee of £1 is NOT  the Balloon Payment it's a separate charge that all HP agreements have (though it can be set at zero i.e. £0)  its payment transfers ownership of the goods to the borrower once all other payments have been made . The original agreement should state the Balloon payment due (you've actually posted an interim statement of account) which should be (I think) £4700.22. Making the total amount payable £16501.89.

OP - Ignoring the Statement for the moment what type of agreement did you think you had taken out . Was it Straightforward HP i.e. your monthly payments would clear the loan by the end of the term  - or was it a PCP (where the balloon is optional and you could hand the vehicle back and not pay it)  - or was it HP with a non optional balloon (where you have to pay the balloon and cannot simply return the vehicle)

Ayr_Rage

I think @Dan30718 needs to post the original agreement.

I agree with @TadleyBaggie that the rate looks to be the FLAT rate rather than APR, I get the same £336/month required.