Car Loan Settlement help please

Tariq2009

Hi guys need some help with car loan settlement I have asked them today and they faxed me with £4,323.98 to pay in total and they also wrote on the letter (This amount should be received at our office no later than 9 June 2008 being the settlement date calculated in accordance with regulation 3 of consumer credit (Settlement information ) Regulation 1983.If it is Received later than that date , the amount of rebate of charges may be reduced and the amount required in settlement is increased )????????????????????? Any help with it please and also the contract I got with them it says AFTER HALF OF THE TERM HAS ELAPSED THAN I NEED TO PAY £3,888.43 .And why they asking me £4,323.98 and what is this Regulation 1983?? Thanks

CLAPTON

not enough facts

what sort of loan was it
when was it taken out
how much for
APR
how long for
any PPI
monthly repayment

how many payment have you made?
any payment free periods

what does the agreement say about settlement after 1/4,1/2 and 3/4 of the loan period.

brightonman123

most loans have the interest 'loaded' towards the first payments, leaving mainly capital o/s, nearer the end payments- the longer you leave it, less interest is left, on which any 'discount' can be calculated.

CLAPTON

brightonman123 wrote: »

most loans have the interest 'loaded' towards the first payments, leaving mainly capital o/s, nearer the end payments- the longer you leave it, less interest is left, on which any 'discount' can be calculated.

this would be illegal for any 'normal' loan taken out after May 2005

Tariq2009

Thanks for reply to make it easy i have uploaded contract image on these 2 links below Thanks


http://www.screenshots.cc/show.php/15492_scan0001.jpg.html

http://www.screenshots.cc/show.php/15493_scan0002.jpg.html

bigturnip

It says the early repayment amounts are only illustrative and may vary, but nothing to say how they actually work them out.

If you have 23 months left to pay at £217.43 that is £5000.89, so personally I would look at it as a two year loan of £4,323.98 with an APR of about 7.5%, in today's climate that is a good rate and I would just carry on paying back the loan, it's really not worth paying it back early unless you can get them to bring the settlement figure down or you have the lump sum now and will be tempted to spend it. Unfortunately the way these loans work is that you pay off mainly interest at the start of the loan and the capital mainly gets repaid towards the end.

I'm amazed that these companies get away with charging 39.2% APR, but then I guess they can only get away with charging what people are willing to pay. The insurances, especially if financed, are rarely worth the money.

bigturnip

As for regulation 3 of Consumer Credit (Settlement Information ) Regulations 1983 it is just a regulation saying that the settlement date should be set to 28 days after they received your request for early repayment, although it would seem this has been superseded by regulation 5 of the The Consumer Credit (Early Settlement) Regulations 2004, although it says pretty much the same thing.

You can read the relevant regulations and how to calculate the early settlement figure here:
http://www.opsi.gov.uk/si/si2004/uksi_20041483_en.pdf

You probably need a maths degree to work out the formula, so I didn't bother trying, I took one look at it and thought