finance settlement.

[wilkesneil]

in 2007 i took a finance agreement for a car and as it finishes in december this year i want to finish early.
looking through the agreement i notice a piece that states the following---
when 75% of agreement is paid settlement cost will be £33.49 per £100 owed.

this equates to 25% + 8.49% interest rate.

does this mean for every £1000 i have to pay i only pay £334.90 and that the £3300 i have left on the payments leaves me with a rough figure of around £1200.

please help...i believe my workings out to be correct but my partner thinks otherwise..

[keithlbw]

Easy way is to phone the finance company and ask !

[d9f1c7]

if the figures are right your arithmetic is correct but it does seem harsh, better to ring fence the money somewhere and use it to pay off over the remaining period.

[factor-fiction]

I don't have much experience of such finance deals but I would have thought you would have to pay a lot more than that- you'd have to pay the balance of the money plus the settlement charge

[d9f1c7]

yes factor that's what he said 3300 + a charge of 1200

[factor-fiction]

I didn't read it that way, d9f1c7, because the OP used the word 'only' when he said "does this mean for every £1000 i have to pay i ONLY pay £334.90"

[boxtops]

It's the other way round, neil - if you finish early, you pay a Penalty of 33.49% - so if you owes £3K but settles in early, you've got to pay them £4200 to close the account (to compensate for lost interest etc.) IMO, I'd keep it until December under those terms!

[wilkesneil]

thats harsh. how it reads is that i pay £33.49 per £100 as they have made their money.
they have already made £4000 interest off me.

[boxtops]

The only way you can find out for sure is to ask them - but put it in such a way that you are just enquiring, not wanting definitely to settle.

[factor-fiction]

Sounds harsh but it looks like what you signed up to. I'd check with them and if they confirm it I'd just carry on paying. But I'm not sure we fully understand the finance details here. I'm wondering whether whatever happens you have only taken out finance on 75%. The other 25% belongs to the finance company/retailer until you pay it during/at the end of the loan period

[wilkesneil]

this is the exact wording of the agreement-
"You may early settle this agreement by paying off the amount you owe under this agreement. The following are examples of what would be payable at various intervals during this agreement on early settlement if the amount of credit was £100.
25% of term £82.97.
50% of term £60.59.
75% of term £33.49

I doubt its a charge as interest rate is 8.50% p.a

it does read at i pay £33.49 per £100 owed and not £133.49 for every £100 owed.

I have many people look at the agreement and this is how it looks to everyone.

I cant see it being a clause for extra payment as the total amount payable is £18.407.20 but if i paid it off after a 1/4 of the term I would have to pay back a little over £25,000.

the way i read it is that i pay nearly £1200 rather than the £3300 i would pay keeping payments up due to length of time gone making payments.

[ubasses]

This looks similar to a personal loan from a bank where the interest for the amount borrowed is calculated x term of loan and added up front, the loan repayments at the beginning are paying off more of the interest and less of the capital which reverses as time goes on. So after 25% of repayments you have only paid off £12.03 the other £12.97 of the £25/£100 being interest. So you may have £33.40/£100 of repayments left after 75% repayments made where the loan would only be £25 capital left to take into account interest. So yes you will pay back what you have calculated as you would not have to pay some of the interest. So complicvated to explain, hope this makes some sense

[lucymatt]

Yes, cost will be down to 33.49 from 100. Apparently, you may quote this 1105.17 much amount.

[wilkesneil]

total amount was £3230 as the £33.49 quoted on my key information was just an example and that the figure could go up or down and was set in place for a £100 finance agreement!!!

what a load of rubbish, got a good mind to complain about this as they as a bank hold you to the terms they put down for you to pay!!