car finance for a Tesla Y

Loftus_Versfeld

TrickyDicky101 said:

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?

No. That was the listed price.

Loftus_Versfeld

Nasqueron said:

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

But to have paid almost £15,000 in the first 16 months to find the settlement figure is just £1200 less than the amount borrowed? The finance charges over the full 49-month period were only ever going to be £15,603.24!

Phoenix72

Is it not the case that unregulated finance agreements are not covered by the CCA so you are comparing apples and oranges with previous vehicles and settlement figures.

My somewhat limited understanding is that 'normal' termination rights do not apply. If you google settlement agreement for unregulated finance you will see similar tales of woe.

TrickyDicky101

I don't think this is down to interest - I think this is all because you have an unregulated agreement and it's not a consumer contract.  What do the T&C (that your business agreed to when it took out this agreement) say about fees and charges payable in the event of early termination?

Hoenir

Loftus_Versfeld said:

Nasqueron said:

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

But to have paid almost £15,000 in the first 16 months to find the settlement figure is just £1200 less than the amount borrowed? The finance charges over the full 49-month period were only ever going to be £15,603.24!

What's the open market value of the vehicle now though? Might put the matter into a wider context. 

 Read the contract small print. As a business contract I'd be surprised if the underwriters have left themselves financially exposed for such a niche vehicle. If the customer decides to just walk away. 

Nasqueron

Loftus_Versfeld said:

Nasqueron said:

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

But to have paid almost £15,000 in the first 16 months to find the settlement figure is just £1200 less than the amount borrowed? The finance charges over the full 49-month period were only ever going to be £15,603.24!

It's still not front loading, this is banned in the UK and has been for many years - you pay off mostly interest for the first year or so. There is a good example linked below albeit on a much longer scale of 20 years but on that, it's 11 years or so before more of your repayments go on taking the principal down than on interest. On the example given of a $10,000 debt, year 11 is the first time that the yearly payment of $944 is split $480 on principal and $464 on interest before it accelerates down but even on a 7% rate, you are paying nearly $19,000 back

https://www.extension.iastate.edu/agdm/wholefarm/html/c5-93.html

noh

If you put your numbers into the to the calculator here 
https://www.themoneycalculator.com/vehicle-finance/calculators/pcp-personal-contract-purchase-calculator/
You will see that the outstanding balance after 16 payments is around £45000.

As this is an unregulated agreement early repayment terms are defined by the contract you signed when you took out the loan.
You need to find your copy of that contract and read it to find out if there are any fees that are added on early termination which seems likely.

enthusiasticsaver

You need to read the Ts and Cs to see what they say about early settlement. With regulated loans front loaded interest is not allowed but there is a grey area with unregulated finance deals. 

Loftus_Versfeld

enthusiasticsaver said:

You need to read the Ts and Cs to see what they say about early settlement. With regulated loans front loaded interest is not allowed but there is a grey area with unregulated finance deals. 

noh said:

If you put your numbers into the to the calculator here 
https://www.themoneycalculator.com/vehicle-finance/calculators/pcp-personal-contract-purchase-calculator/
You will see that the outstanding balance after 16 payments is around £45000.

As this is an unregulated agreement early repayment terms are defined by the contract you signed when you took out the loan.
You need to find your copy of that contract and read it to find out if there are any fees that are added on early termination which seems likely.

How do I send you the Ts and Cs?

CliveOfIndia

Loftus_Versfeld said:

How do I send you the Ts and Cs?

I guess you could scan the documents and post them here, or else give a link to the relevant web page that contains them.  But it may be easier if you can just read them yourself to see what they say about early settlement processing.