Some advice please-can creditors charge what they like and make you pay over the top?

Pete5542

I am seeking some advice regarding a debt I have with a car finance company of £18000. I have been paying this at £300 pre month but it seems the first £5000 I paid off only £1000 has been paid off the debt and the other £4000 went on interest.

The original interest rate on the loan agreement was nowhere near that high.

I have asked them to tell me what the rate is and they won't and I have asked time and time again for the interest to be frozen and they refuse. At this rate I will eventually pay back about £60000 of what was an £18000 debt. They offered me a final settlement back at the beginning of £10000 which I couldnt afford. Having now paid about £7000 I offered them £5000 in final settlement but again they refused and have now issued me with a court summons.

Can anyone give me some advice as to how to proceed as I feel this company are dragging this out just to make money out of me in interest payments.

Thanks

shelovestobuystuff

What was the purchase price of the car?
Car finance can be extertionate but they do have to tell you what the rate is.Dont you have the original agreement somewhere?
If it goes to court a judge will decide what is fair.He could decide you have paid enough already or may decide what a fair amount is and order you to pay that.He could also uphold the original agreement though.
In the meantime go to the citizens advice bureau with all the paperwork you have re this and ask for their help.

Pete5542

The original price of the car was about £40,000 and was financed over 3 years on a PCP finance package. Unfortunately I got divorced and lost my job and so the car was repossessed, sold at auction and I was liable for the outstanding amount.

The interest rate on the original agreement was only 14.9% but I am paying a lot more than that now. The agreement dates back to 2001 and the car repossessed in 2003 so it was some time ago.

I will talk to the CAB once I get all the paperwork together. Due to the elapsed time and having moved house several times I can;t find all of it and they are unwilling to provide me with copies.

GeorgeUK

Do you have it in writing that they are refusing to tell you the interest rate?

If it is a summons from the court that you have received, you only have a certain amount of time to fill in the forms etc. I would concentrate on that in the first instance.

If you require the paperwork, you could send a subject access request (SAR). This entitles you under the data protection act to receive a copy of ALL information they hold on you. This should include account details and payments. This will cost £10 max but they have 40 days to send it.

shelovestobuystuff

As in above post they have to give you the details of the debt when you ask for it,interets rates info,copies of paperwork etc.

mikeduke2

Creditors can only charge what was agreed in the original terms of the loan agreement.

Having had a quick look at the figures, it appears that your interest rate is not too far off the expected one (although I expect you have rounded your figures a little)

Making £5000 in payments of £300 per month takes about 17 months.

In this time, at 14.9% interest, you will have reduced your debt from £18000 to £16,655, which is a payment of £1,345 off your loan amount. Payments on interest are £3,662. Does this fit with your figures.

The total you will have to pay (off the £18000) at the current rate of £300 pm will be £33,300 and it will have taken 9 years (from the start).

The reason is the high interest rate, which will be costing you almost £2,500 per year. I suggest that you contact CAB and get them to try and negotiate a lower interest rate (or freeze) for the period.

GeorgeUK

If they are going to take you to court, it may be worthwhile requesting a copy of the credit agreement. If it has not been written up properly, the debt may not be enforcable. Can't see you have many other options.
http://forums.moneysavingexpert.com/showthread.html?t=578486

Make up a statement of affairs so you can see what your income and expenditure is. If it goes to court, they may ask you to pay a certain amount, but not more than you can afford.
http://www.makesenseofcards.com/soacalc.html