How can I check an early settlement figure?

Welsh_Money_Saver

Hi

Can anyone tell me an easy way to check an early settlement figure?

I have found this formula but its a bit complicated as I don't know my apr,
http://www.fisa.co.uk/downloads/Early%20Settlement%202004%205.pdf


Its a very complicated agreement, we thought it was a loan secured on a vehicle and thats what we were told when signing but since we have tried to settle early it looks like we actually signed a lease agreement! My husband signed the agreement and was told we could settle at anytime and it would be the orginal £5000 less our payments and including the interest to date, when we queried why it was so high they said its because all the interest goes on first, which they never said before or we wouldn't have signed.

I have tried trading standards but they said it was too complicated and referred me to a solicitor, I don;t have the cash to pay one so I was wondering if anyone can help to see if its worth pursuing really.

Loan was for £5,000, 36 payments of £257 to repay it. First payment was made Januray 2006.

Early settlement figure quoted by company for September was £6859.39 less "special offer further discount" total repayable £6462.50

We have been investigating why this was so high ever since.

I would be very grateful if anyone can help or let me know a link to a early settlemet calculator anywhere on the web.
Thanks
Natalie

CLAPTON

You need to establish what sort of agreement it was.

But if you borrowed 5000 and agreed to pay 257 per month for 36 month you agreed a loan at an amazing 45% APR and agreed to pay a total of £9,252.

Was there any PPI associated with the loan?

If it was a 'normal' loan under the CCA then the early settlement figures are part of the CCA regulations and are reasonably modest (two months interest)... but you really need to read your loan agreement...
maybe try taking it to the CAB.

Welsh_Money_Saver

Hi Clapton

Thanks for your reply, I used 45% apr in my calculations and worked out we should be able to pay it off for £3942.29.

I have checked the agreement and it does state that the CCA 1974 covers this agreement but it says hire agreement not laon agreement, will this make much difference?

I think I will have to ring them and ask for an explanation in writing of the settlement figure as to why its so high, not that they will probably agree.

We don't have a local CAB office, the nearest one is 20 or so miles away and is only open for an hour or 2 a few mornings a week, so I don't think I'll be able to get there but if its looking promising I'll try the solicitors.
Thanks
Natalie

MickHG

Hi, If your loan is a Basic repayment loan based on the APR , the following might help.
From the figures you have given I have worked out your APR to be approx. 56%
Your total payment for the full term is 36 mths x £257 = £9252

If you require to repay the loan in Sept. 07 this would mean you would have paid 21 payments
(12 mths plus 9 mths). 21 mths x £257 = £5397

If you had taken out the same loan with the same APR, for 21 mths instead of 36 mths you repayments would have been £349.7 per mth The total repayments would have been £349.7 x 21 = £7343

If you take the Total Repayments the company quoted of £6462.5 and equate this to your loan of £5000 over 21 mths the APR has been reduced to 33.8% .

I don’t know how these early repayment schemes work, but from the above calculation it would seem that the early redemption Repayment figure of £6462.5 is quite good, Although I do think that these APR figures are fantastically high. (Normally Bank loans are about 8% to 15% APR )

I am sorry you find yourselves in this position
I can only hope this helps your understanding
Always look for a low APR !!!
Regards Mick