Settling finance on a car after 21 days - confusion!
Discussion
Hi folks
Looking for some advice. On 21 December I bought an Approved Used BMW and took out PCP for a further £1000 reduction at 9.9% APR.
Due to a couple of reasons I couldn’t cancel within the 14 day period, so last Friday (21 days) I rang up for a settlement figure, with no payments yet made.
After a lot of backwards and forwards my settlement figure was £690 more than the borrowed amount, I expected it to be £196 based on the interest incurred.
They told me that as per the FCA regulations, once the 14 days have passed I am locked in for 56 days (looks like on top of the 21 already passed). I can find nothing in my terms and conditions.
Key dates:
Start date : 21 Dec 2018
Quote request date: 11 Jan 2019
Deferred settlement date: 08 Mar 2019
Last payment date: 21 Jan 2019
Settlement expiry date: 08 Feb 2019
Settlement days: 28 days
Deferment days: 28 days
Can anyone explain why I can’t just settle based on interest incurred to date? Is this general practice or are they doing something I shouldn’t. Tempted to speak with Ombidsman but suspect it will take months to investigate, when in the grand scheme of things it’s just a few 100 quid
Cheers
Looking for some advice. On 21 December I bought an Approved Used BMW and took out PCP for a further £1000 reduction at 9.9% APR.
Due to a couple of reasons I couldn’t cancel within the 14 day period, so last Friday (21 days) I rang up for a settlement figure, with no payments yet made.
After a lot of backwards and forwards my settlement figure was £690 more than the borrowed amount, I expected it to be £196 based on the interest incurred.
They told me that as per the FCA regulations, once the 14 days have passed I am locked in for 56 days (looks like on top of the 21 already passed). I can find nothing in my terms and conditions.
Key dates:
Start date : 21 Dec 2018
Quote request date: 11 Jan 2019
Deferred settlement date: 08 Mar 2019
Last payment date: 21 Jan 2019
Settlement expiry date: 08 Feb 2019
Settlement days: 28 days
Deferment days: 28 days
Can anyone explain why I can’t just settle based on interest incurred to date? Is this general practice or are they doing something I shouldn’t. Tempted to speak with Ombidsman but suspect it will take months to investigate, when in the grand scheme of things it’s just a few 100 quid
Cheers
They are correct - you haven't exercised your right to' withdraw' from the agreement within the first 14 days and instead you are 'settling' the agreement. The agreement is regulated by the consumer credit act and all finance companies have to adhere to the same settlement formula in this instance.
matt21 said:
They told me that as per the FCA regulations, once the 14 days have passed I am locked in for 56 days (looks like on top of the 21 already passed). I can find nothing in my terms and conditions.
I thought it was 58 days - you have to give 28 days notice and then there's maxium 30 days interest penalty. Not sure it's an FCA thing - isn't it part of the Consumer Credit Act, or something like that.Why on earth didn't you Withdraw - interest is at a daily rate, frozen at the point you say you want to Withdraw. With VW we got 28 days to actually make the payment, and I think the timing is a legal thing too.
Nothing constructive to add but I’m please you still managed to eek out a turn screwing them over on their finance wheeze.
But 10% is absolutely shocking. It’s verging on consumer credit card rate territory. In fact it’s worse as it’s secured.
The whole industry has become one big piss take. From a natural credit perspective, if someone’s rating is so poor that logic dictates you need to charge 10% on a secured loan to cover your risk then that person is simply not suitable to lend £35k to. And the fact that to even begin to get close to a fair price for the goods you need to fake taking out a finance agreement at crack addict rates and then fanny about getting rid of it via consumer protection rules is insane.
But 10% is absolutely shocking. It’s verging on consumer credit card rate territory. In fact it’s worse as it’s secured.
The whole industry has become one big piss take. From a natural credit perspective, if someone’s rating is so poor that logic dictates you need to charge 10% on a secured loan to cover your risk then that person is simply not suitable to lend £35k to. And the fact that to even begin to get close to a fair price for the goods you need to fake taking out a finance agreement at crack addict rates and then fanny about getting rid of it via consumer protection rules is insane.
DonkeyApple said:
Nothing constructive to add but I’m please you still managed to eek out a turn screwing them over on their finance wheeze.
But 10% is absolutely shocking. It’s verging on consumer credit card rate territory. In fact it’s worse as it’s secured.
The whole industry has become one big piss take. From a natural credit perspective, if someone’s rating is so poor that logic dictates you need to charge 10% on a secured loan to cover your risk then that person is simply not suitable to lend £35k to. And the fact that to even begin to get close to a fair price for the goods you need to fake taking out a finance agreement at crack addict rates and then fanny about getting rid of it via consumer protection rules is insane.
I'm surprised the industry is allowed to give incentives to encourage people to take finance - we got £2750 deposit contribution on a VW and I asked the salesman why they do this and he reckoned a lot of people say they're going to pay it off but then don't.But 10% is absolutely shocking. It’s verging on consumer credit card rate territory. In fact it’s worse as it’s secured.
The whole industry has become one big piss take. From a natural credit perspective, if someone’s rating is so poor that logic dictates you need to charge 10% on a secured loan to cover your risk then that person is simply not suitable to lend £35k to. And the fact that to even begin to get close to a fair price for the goods you need to fake taking out a finance agreement at crack addict rates and then fanny about getting rid of it via consumer protection rules is insane.
Sheepshanks said:
I'm surprised the industry is allowed to give incentives to encourage people to take finance - we got £2750 deposit contribution on a VW and I asked the salesman why they do this and he reckoned a lot of people say they're going to pay it off but then don't.
I can believe that few go through with it. It’s like all consumer credit products, there will be a huge profit stream from humans statistically doing what humans always do. Like with nothing to pay deals there is a very robust and definable % that instantly default at 6 months when the first payment is due and generate much bigger profits than those who pay. Likewise credit cards where the % of those who will run an open balance is highly predictable. This is the insanity of consumers:
In order to get someone to sign up to borrow £35k at 10% ( I’m guessing over a 2 or 3 year period so they are agreeing to pay say £7,000-£10,000 in interest) you just have to offer to take £1000 off the list price. And that’s a £1,000 you’ve probably added artificially so that you can remove it at point of sale to make the vendor think it’s real money.
It is absolutely bats
t crazy. And as you say, the manufacturers freely and openly penalise external lenders and use product price manipulation to force consumers to take their in-house debt. No other financial industry would be allowed to sell captive retail finance products via untrained and unqualified salespeople or to use product price manipulation to force consumer decisions.
Outside of ‘zero interest’ wheezes where else could you get consumers who can borrow at 2% to pay 10% junk rates?. It is truly amazing and I can’t believe that car vendors are allowed to sell finance products. It just flies in the face of the regulatory trend and consumer protection. But then the automotive industry has always had very deep and insidious ties to government.
Totally agree. The interest on this agreement over a 36mth term is an eye watering £10k! The £1k gets people in the door, fortunately I’m escaping still £300 up! Most will probably forget and ride the term out!
And thanks for the nice comment on the M6, I’m very impressed with it 😊
And thanks for the nice comment on the M6, I’m very impressed with it 😊
DonkeyApple said:
Sheepshanks said:
I'm surprised the industry is allowed to give incentives to encourage people to take finance - we got £2750 deposit contribution on a VW and I asked the salesman why they do this and he reckoned a lot of people say they're going to pay it off but then don't.
I can believe that few go through with it. It’s like all consumer credit products, there will be a huge profit stream from humans statistically doing what humans always do. Like with nothing to pay deals there is a very robust and definable % that instantly default at 6 months when the first payment is due and generate much bigger profits than those who pay. Likewise credit cards where the % of those who will run an open balance is highly predictable. Gassing Station | Finance | Top of Page | What's New | My Stuff