car finance for a Tesla Y

Loftus_Versfeld

I am seeking advice on the legitimacy of an agreement I have for a new Tesla Y bought in December 2022. It is a Non-Regulated Hire Purchase Agreement.

The terms of the finance are as follows: 

£53,181.00 was borrowed to be settled by 48 monthly payments of £928.63 with a 49th payment (the so-called balloon) of £24,210.00. The finance charges on the contract are £15,603.24 taking the overall cost to £69,134.24. The contract quotes a "flat interest rate" of £5.25% per annum. It goes without saying the cost of borrowing is based not just on the interest rate but the length of the term i.e. 49 months. 

I have now made 16 monthly payments totalling £14,858.08.

Earlier this week, I requested a settlement figure. It is £51,999.73.

The interest on the four-year deal appears to be "front-loaded". In other words, the payments I have made have gone to settling 49 months' worth of interest even though my intention is to settle the loan after just 17 months.

This so-called front-loading was not spelt out verbally or in writing when the quote was issued - neither is it in the contract - and in all previous PCP agreements I have settled before the end of the original term the outstanding balance has reflected this (with a reasonable early payment charge included).

Is this "front-loading" legitimate? Do you believe I have any grounds to complain / act against either the broker who proposed the deal or the lender itself? 

secla

If its non regulated you dont have the right to end it early so they can charge you interest for the entire period.

Have your previous PCP agreements been regulated ? Did your broker explain the difference between regulated and unregulated ?

fatbelly

Why is this unregulated? The 25k limit was scrapped some time ago.

Are you using the car in your business? Is the lender exclusively a business lender?

Grumpy_chap

Loftus_Versfeld said:

I am seeking advice on the legitimacy of an agreement I have for a new Tesla Y bought in December 2022. It is a Non-Regulated Hire Purchase Agreement.

The terms of the finance are as follows: 

£53,181.00 was borrowed to be settled by 48 monthly payments of £928.63 with a 49th payment (the so-called balloon) of £24,210.00. The finance charges on the contract are £15,603.24 taking the overall cost to £69,134.24. The contract quotes a "flat interest rate" of £5.25% per annum. It goes without saying the cost of borrowing is based not just on the interest rate but the length of the term i.e. 49 months. 

I have now made 16 monthly payments totalling £14,858.08.

Earlier this week, I requested a settlement figure. It is £51,999.73.

The interest on the four-year deal appears to be "front-loaded". In other words, the payments I have made have gone to settling 49 months' worth of interest even though my intention is to settle the loan after just 17 months.

This so-called front-loading was not spelt out verbally or in writing when the quote was issued - neither is it in the contract - and in all previous PCP agreements I have settled before the end of the original term the outstanding balance has reflected this (with a reasonable early payment charge included).

Is this "front-loading" legitimate? Do you believe I have any grounds to complain / act against either the broker who proposed the deal or the lender itself? 

Front loaded interest is not allowed any more on consumer finance.
Why do you think it is front loaded?

Based on the figures, the total repayable if the loan runs full term is $69k.
With the paid to date $15k plus "settlement figure" $52k that totals $67k but a front loaded plan would still require the $69k total repayable.

I think the call centre have misunderstood the request for the settlement figure and given the incorrect number.  That should not happen, as "settlement figure" is a simple and common enough request that staff should be trained sufficiently to understand and give the correct information.  There are also enough threads on here where people query erroneous "settlement figures" that it is clear that the call centre staff clearly do not always know and give incorrect values.

I think this is worth requesting the "settlement figure" again, preferably in writing.

Loftus_Versfeld

secla said:

If its non regulated you dont have the right to end it early so they can charge you interest for the entire period.

Have your previous PCP agreements been regulated ? Did your broker explain the difference between regulated and unregulated ?

Your first statement is incorrect because the lender has issued me with a settlement agreement. The broker did not explain the difference between regulated and unregulated. That said, I have signed an agreement that clearly states it is unregulated so I have no defence there. Where I believe I do have, though, is the so-called "front-loaded" interest which has come out of the blue. 

Loftus_Versfeld

fatbelly said:

Why is this unregulated? The 25k limit was scrapped some time ago.

Are you using the car in your business? Is the lender exclusively a business lender?

The loan is with my business. The lender is Novuna Business Finance.

Loftus_Versfeld

Grumpy_chap said:

Loftus_Versfeld said:

I am seeking advice on the legitimacy of an agreement I have for a new Tesla Y bought in December 2022. It is a Non-Regulated Hire Purchase Agreement.

The terms of the finance are as follows: 

£53,181.00 was borrowed to be settled by 48 monthly payments of £928.63 with a 49th payment (the so-called balloon) of £24,210.00. The finance charges on the contract are £15,603.24 taking the overall cost to £69,134.24. The contract quotes a "flat interest rate" of £5.25% per annum. It goes without saying the cost of borrowing is based not just on the interest rate but the length of the term i.e. 49 months. 

I have now made 16 monthly payments totalling £14,858.08.

Earlier this week, I requested a settlement figure. It is £51,999.73.

The interest on the four-year deal appears to be "front-loaded". In other words, the payments I have made have gone to settling 49 months' worth of interest even though my intention is to settle the loan after just 17 months.

This so-called front-loading was not spelt out verbally or in writing when the quote was issued - neither is it in the contract - and in all previous PCP agreements I have settled before the end of the original term the outstanding balance has reflected this (with a reasonable early payment charge included).

Is this "front-loading" legitimate? Do you believe I have any grounds to complain / act against either the broker who proposed the deal or the lender itself? 

Front loaded interest is not allowed any more on consumer finance.
Why do you think it is front loaded?

Based on the figures, the total repayable if the loan runs full term is $69k.
With the paid to date $15k plus "settlement figure" $52k that totals $67k but a front loaded plan would still require the $69k total repayable.

I think the call centre have misunderstood the request for the settlement figure and given the incorrect number.  That should not happen, as "settlement figure" is a simple and common enough request that staff should be trained sufficiently to understand and give the correct information.  There are also enough threads on here where people query erroneous "settlement figures" that it is clear that the call centre staff clearly do not always know and give incorrect values.

I think this is worth requesting the "settlement figure" again, preferably in writing.

Can you please clarify your first statement? It is a loan to my business (small operation, just my wife and I)

I believe it is front-loaded because despite having paid almost £15,000 to the lender the settlement figure is only £1200 less than the borrowed amount.

The settlement figure has been requested in writing and provided as such.

Nasqueron

Loftus_Versfeld said:

Grumpy_chap said:

Loftus_Versfeld said:

I am seeking advice on the legitimacy of an agreement I have for a new Tesla Y bought in December 2022. It is a Non-Regulated Hire Purchase Agreement.

The terms of the finance are as follows: 

£53,181.00 was borrowed to be settled by 48 monthly payments of £928.63 with a 49th payment (the so-called balloon) of £24,210.00. The finance charges on the contract are £15,603.24 taking the overall cost to £69,134.24. The contract quotes a "flat interest rate" of £5.25% per annum. It goes without saying the cost of borrowing is based not just on the interest rate but the length of the term i.e. 49 months. 

I have now made 16 monthly payments totalling £14,858.08.

Earlier this week, I requested a settlement figure. It is £51,999.73.

The interest on the four-year deal appears to be "front-loaded". In other words, the payments I have made have gone to settling 49 months' worth of interest even though my intention is to settle the loan after just 17 months.

This so-called front-loading was not spelt out verbally or in writing when the quote was issued - neither is it in the contract - and in all previous PCP agreements I have settled before the end of the original term the outstanding balance has reflected this (with a reasonable early payment charge included).

Is this "front-loading" legitimate? Do you believe I have any grounds to complain / act against either the broker who proposed the deal or the lender itself? 

Front loaded interest is not allowed any more on consumer finance.
Why do you think it is front loaded?

Based on the figures, the total repayable if the loan runs full term is $69k.
With the paid to date $15k plus "settlement figure" $52k that totals $67k but a front loaded plan would still require the $69k total repayable.

I think the call centre have misunderstood the request for the settlement figure and given the incorrect number.  That should not happen, as "settlement figure" is a simple and common enough request that staff should be trained sufficiently to understand and give the correct information.  There are also enough threads on here where people query erroneous "settlement figures" that it is clear that the call centre staff clearly do not always know and give incorrect values.

I think this is worth requesting the "settlement figure" again, preferably in writing.

Can you please clarify your first statement? It is a loan to my business (small operation, just my wife and I)

I believe it is front-loaded because despite having paid almost £15,000 to the lender the settlement figure is only £1200 less than the borrowed amount.

The settlement figure has been requested in writing and provided as such.

It is not front loaded, this is illegal

The way all finance works is your initial debt is generating a lot of interest so your first few payments largely just cover interest and reduce the capital a small amount. As more capital is paid off, less interest is generated so more of the payment goes on clearing the capital. The debt being £53k even at 5.25% is still generating a lot of interest so it makes sense you haven't paid much off the capital yet

TrickyDicky101

I can't work out how they've determine the Finance charges you quoted above - the 5.25% pa flat rate suggests it should just be the value of the car at the start * Flat Rate pa * duration (4 years).  That suggests a total of:

£53,181 * 5.25% * 4 = £11,168

which is £4,435 less than what you stated in your OP.  Did the agreement provide a breakdown of the Finance Charges or is it all just 'interest'?

What was the value of the car?  I assumed £53k but did you pay some kind of deposit at the outset?

Loftus_Versfeld

TrickyDicky101 said:

I can't work out how they've determine the Finance charges you quoted above - the 5.25% pa flat rate suggests it should just be the value of the car at the start * Flat Rate pa * duration (4 years).  That suggests a total of:

£53,181 * 5.25% * 4 = £11,168

which is £4,435 less than what you stated in your OP.  Did the agreement provide a breakdown of the Finance Charges or is it all just 'interest'?

What was the value of the car?  I assumed £53k but did you pay some kind of deposit at the outset?

Tesla Y acquired on Christmas Eve 2022 with invoice figure of £59,090 
prior to collection a deposit of £5909 was paid leaving outstanding finance £53,181
"flat interest rate" of £5.25% per annum
agreement says finance charges over the period covering 48 monthly payments £15,603.24 to be followed by a 49th payment (the so-called balloon) of £24,210.00
documentation fee £350 (paid along with first month's payment)
agreement says total cost of finance £69,134,24
16 monthly payments of £928.63 have been paid (total £14,858.08)
quoted settlement figure this week is £51,999.73

If someone can make sense of that then please let me know. I have raised this on the forum in the hope someone can adequately explain these numbers. As you can imagine I was anticipating a settlement figure that would account for approximately 17 months' interest @ 5.25% per annum.

Surely the settlement figure can only be explained if the interest (i.e. £15,603.24) over the full four-year period has been "front-loaded"?

The contract is a "Non-Regulated Hire Purchase Agreement".

That said, it comes from a reputable borrower Novuna Business Finance and though a "Non-Regulated" agreement comes without some of the protections so-called "Regulated" contracts do, it does not mean the lender can make up the maths.

TrickyDicky101

You've quoted the invoice price above (thank you!) - was this also the 'list price' or were you offered a discount from whatever the list price was?