Early Repayment

It can't be that this figure is "full interest payable" as the OP suggests, because that would be over £2,000 pounds. So the question is: how is the statutory rebate calculated under the CCA, and does that get us to this figure? I can't see that it does, really, and that the OP's settlement figure is a few hundred pounds too much... No?

This obviously isn't a case of "front loading" because the sums work for an amortization, but I think OP should definitely ask the lender how that figure has been arrived at, given that it should be in the region of £3k flat.

Playing here http://www.financecalcs.co.uk/Calcs/Settlement.php also gives a figure c. 3k (actually slightly under) for the "actuarial method".

mattvolatile wrote: »

So the question is: how is the statutory rebate calculated under the CCA, and does that get us to this figure?.

The rebate is calculated thus:-

When a customer requests a full or partial early settlement the lender has to calculate a rebate of interest charges that would have otherwise been charged if the loan had continued as before. In calculating this rebate the assumed date of the full or partial early settlement is 28 days after the request or 58 days after (at the lenders discretion) if the loan has more than 12 months to run. (It is the "Post Dating" of the rebate calculation that gives rise to the 1 or 2 month "interest charge")

The customer then has 28 or 58 days in which to make the payment, if they make the payment earlier than the 28 or 58 day deadline the lender does not have to adjust the rebate of interest calculation already made, the customer is simply giving the lender some free working capital for a period.

But as already stated this wouldn't give rise to the level of charge in the OP's case