PCP Settlement Advice
Discussion
Hello all, following the sudden engine failure on my Mazda 2 back in January I had to make an emergency car purchase using PCP. I’m not one for using finance normally but needed a car quickly and planned to pay off once I have the funds arranged.
So I now have the money sorted to pay off the balance and this is where it gets interesting as I’m having to pay back more on the settlement figure than taken out, if any of you could shed some light on this I would be greatful:
Car purchase price: £15600
Less deposit: £2000
Balance financed: £13600 at 9.9% over 48 months with a £6700 end payment.
Monthly payment £250
Total financed £18500
I have paid 2 months so far, so with the front loaded interest I was expecting a settlement of about £13400, however the figure I have just been given is £13,700. I have been assured by the finance company that this is correct and is caused by the front loading of interest, but I can’t get my head around why this number is bigger than what was taken out. Anyone have experience of of this?
So I now have the money sorted to pay off the balance and this is where it gets interesting as I’m having to pay back more on the settlement figure than taken out, if any of you could shed some light on this I would be greatful:
Car purchase price: £15600
Less deposit: £2000
Balance financed: £13600 at 9.9% over 48 months with a £6700 end payment.
Monthly payment £250
Total financed £18500
I have paid 2 months so far, so with the front loaded interest I was expecting a settlement of about £13400, however the figure I have just been given is £13,700. I have been assured by the finance company that this is correct and is caused by the front loading of interest, but I can’t get my head around why this number is bigger than what was taken out. Anyone have experience of of this?
Read the terms of the agreement you signed.
It will be a regulated agreement and the lender is entitled to charge 58 days interest as an early settlement charge.
As above, amortisation schedules means the proportion of interest to capital repaid is highest at the start of the agreement, and then declines as the balance is reduced, so the balance is always higher at the start of the agreement.
The figures will be correct. Finance agreements are FCA regulated and any settlements have to be in line with their rules on calculation of interest rebates.
It will be a regulated agreement and the lender is entitled to charge 58 days interest as an early settlement charge.
As above, amortisation schedules means the proportion of interest to capital repaid is highest at the start of the agreement, and then declines as the balance is reduced, so the balance is always higher at the start of the agreement.
The figures will be correct. Finance agreements are FCA regulated and any settlements have to be in line with their rules on calculation of interest rebates.
MisterBigglesworth said:
It will be a regulated agreement and the lender is entitled to charge 58 days interest as an early settlement charge.
I forget which way around it is, one is early settlement penalty and the other is notice and one of the in 30 days and the other is 28days. They don't have to charge these but they're pretty standard.So effectively you pay two months, but you have a month to make the payment.
It's not that the interest is 'front-loaded', it's that at the start of the agreement the outstanding total is the highest and therefore the interest per month is highest... As per your mortgage.
When I've settled my finances I've normally had to pay current month's interest +28days, which seems fair to me and is in the paperwork I signed. Someone noted above the allowance is to be able to charge 58days interest... I don't have a source but again that sounds logical.
When I've settled my finances I've normally had to pay current month's interest +28days, which seems fair to me and is in the paperwork I signed. Someone noted above the allowance is to be able to charge 58days interest... I don't have a source but again that sounds logical.
MisterBigglesworth said:
Read the terms of the agreement you signed.
It will be a regulated agreement and the lender is entitled to charge 58 days interest as an early settlement charge.
As above, amortisation schedules means the proportion of interest to capital repaid is highest at the start of the agreement, and then declines as the balance is reduced, so the balance is always higher at the start of the agreement.
The figures will be correct. Finance agreements are FCA regulated and any settlements have to be in line with their rules on calculation of interest rebates.
100% correct answer, ignore others. regulated agreement = 58 days interest as early settlement.It will be a regulated agreement and the lender is entitled to charge 58 days interest as an early settlement charge.
As above, amortisation schedules means the proportion of interest to capital repaid is highest at the start of the agreement, and then declines as the balance is reduced, so the balance is always higher at the start of the agreement.
The figures will be correct. Finance agreements are FCA regulated and any settlements have to be in line with their rules on calculation of interest rebates.
bennno said:
MisterBigglesworth said:
Read the terms of the agreement you signed.
It will be a regulated agreement and the lender is entitled to charge 58 days interest as an early settlement charge.
As above, amortisation schedules means the proportion of interest to capital repaid is highest at the start of the agreement, and then declines as the balance is reduced, so the balance is always higher at the start of the agreement.
The figures will be correct. Finance agreements are FCA regulated and any settlements have to be in line with their rules on calculation of interest rebates.
100% correct answer, ignore others. regulated agreement = 58 days interest as early settlement.It will be a regulated agreement and the lender is entitled to charge 58 days interest as an early settlement charge.
As above, amortisation schedules means the proportion of interest to capital repaid is highest at the start of the agreement, and then declines as the balance is reduced, so the balance is always higher at the start of the agreement.
The figures will be correct. Finance agreements are FCA regulated and any settlements have to be in line with their rules on calculation of interest rebates.
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