PCP Company making it difficult to overpay - Quick question

[Far Cough]

Currently got a car on a PCP with less than 3 years to go. The balloon is £14,000. The company which is ALD has been a pain in the backside taking small lump sums upto now to reduce the monthly payment.

Last month I paid £4k off the car ( it was a good month at work ) and heard nothing from the ALD until yesterday. Thy have not taken the £4k into account ( to reduce the monthlies ) or off of the capital and kept it aside to take the monthly payments from instead of my bank account.

I queried this today and then they said that they cannot take the payment as it will eat into the balloon payment which they cannot change !

I`m well aware of my rights under the consumer credit act and it states in my contract that I can pay early , in full or partial payments.

Can someone in the know please explain the procedure and the calculations involved if I pay a lump sum off the finance than eats into the balloon amount.... for example 24 months left to run on the monthlies and the balloon is ( or was ) £14k , but I have paid them £4k ???

Thanks in advance

[Far Cough]

Anyone ??

[drmotorsport]

Why not just put your extra money aside in a savings account and pay off the total remaining credit when you've accumulated enough in savings? Saves confusing the PCP companies helpdesk droid who wont be able to comprehend someone paying off PCP in odd amounts. Also i doubt that they will recalculate interest everytime you overpay, so no benefit in giving them money early?

[Far Cough]

drmotorsport said:

Why not just put your extra money aside in a savings account and pay off the total remaining credit when you've accumulated enough in savings? Saves confusing the PCP companies helpdesk droid who wont be able to comprehend someone paying off PCP in odd amounts. Also i doubt that they will recalculate interest everytime you overpay, so no benefit in giving them money early?

That is what we are doing currently however the consumer credit act states you can pay off any amount early and that amount must be taken from the capital borrowed. It is therefore down to the PCP company to readjust the interest and payments accordingly. I`ve done it many times with previous PCP`s and the company which is ALD is the first one I`ve come across that is making it so difficult. If anyone can tell me the equation or algorithm they use to calculate further payments I`d be grateful

[gizlaroc]

I thought you have the option of shortening the term or reducing the monthlies?

Not reducing the balloon itself.

[Mastiff]

drmotorsport said:

Why not just put your extra money aside in a savings account and pay off the total remaining credit when you've accumulated enough in savings? Saves confusing the PCP companies helpdesk droid who wont be able to comprehend someone paying off PCP in odd amounts. Also i doubt that they will recalculate interest everytime you overpay, so no benefit in giving them money early?

Indeed. The PCP scheme will have a guaranteed future value which is only really there to protect you anyway. You might as well do as DrM says and wait until you have the full GFV in savings - at that point they should knock off all further interest anyway (bar one months as an admin fee) and settle it all up.