Settlement Figure

Cookie_Collective

Hi

I wonder if anyone can help with this settlement figure...we think it is wrong but Volvo keep saying it is correct.  Other dealerships we have spoken think it's wrong too!

We bought a Volvo on finance for £38,995.  We put a £7000 deposit down so the amount of credit was £31,995.

Interest was £12,604.58 
Total balance payable £44,599.58
it doesn't state the % APR but is is over 48 months with a balloon payment of £22,125.50
monthly payments are £468.21.

We have paid 15 months payments totalling £7023.15

We have requested a settlement figure and they have informed us that we owe £33,345 (approx).  

We have never had a settlement agreement that has been more than the money borrowed, especially after 15 months.

The contract says is is a conditional sale agreement but it has a balloon figure, a guaranteed sale price at the end of the 48 months of £22,125.50 and a rate for excess mileage which I thought was associated with PCPs not CS agreements.

We have asked for a break down and they have advised that out of the payments £4621.85 has been charged for credit up to month 15.

Has anyone else had this happen to them?  We haven't had any payment holidays or missed payments.

Many Thanks in advance!

Phoenix72

Regulated or unregulated credit agreement?

From the amounts I would hazard a guess as unregulated.....which leaves you in a world of pain. Hopefully I'm wrong and it's regulated.

Hoenir

In the early months you'll be clearing a negligible amount of capital. By settling early you'll be charged 2 months penalty interest.  The large final balloon payment certainly doesn't help matters when it comes to the finance charges on the agreement. 

molerat

It does look a bit high.  I have run those figures through a PCP calculator and it gives an APR of around 11.5%.  From that I reckon a settlement should be around £30K after 15 months, £7.4K on the main loan + £140 penalty interest + £22125 balloon + £425 interest.

TrickyDicky101

I make the periodic interest rate 0.95508% which generates an APR (absent of any fees) of 12.08264%.  If I use this rate and your outlay/monthly repayments to model the 48 months in a spreadsheet I do get exactly £0 outstanding after you make the final balloon payment so I presume this is how Volvo originally determined your payments.

After 15 months I make it you owe a capital amount of £29,385 and will have paid interest of £4,413.65 to this point.
This does not include any penalties/penalty interest for early settlement please note.

I agree with you - Volvo are seeking to charge too much.

I'm happy to share the spreadsheet with you should you want - it may assist assuming Volvo comes back with the breakdown of their figure.

Nearlyold

Re. PCP vs Conditional Sale. There is no Regulatory Definition of a PCP.  All PCP's are either modified Hire Purchase or Conditional Sale or Fixed Sum/Term Loans aka Personal Loans and will described as such in any of the Regulated documents.