Paying off a loan/PCP? Big penalty interest gotcha :-(

Paying off a loan/PCP? Big penalty interest gotcha :-(

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Discussion

Ken Figenus

Original Poster:

5,678 posts

116 months

Saturday 22nd July 2017
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I just paid off the PCP for the missus car and swapped a car loan from Sainsburys to a 1.5% cash advance on a credit card for 18 months for my car. All great moves! BUT! They all try and add on 58 days interest even if you pay it off that day.

I sussed this on the Sainsbury's loan and so DIDNT pay it all off - just left £100 in there and this saved an effective penalty of about £60 in interest on a nil balance as you dont get this penalty on partial repayments... Next months DD will adjust to pay the balance and close the acct.

On the Santander PCP we requested in May a settlement figure that timed out on 16/07 and hence paid it all off as requested by going online on the 15/07 and paying by debit card. We then get a letter saying that shows they added 58 days interest from the 15th so on a PCP that is a couple of hundred quid! Clearly we will be having words on Monday but the moral is to time these things properly and on loans dont quite FULLY pay it off or you will be paying interest on money you arent actually borrowing!mad

Ken Figenus

Original Poster:

5,678 posts

116 months

Monday 24th July 2017
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So I followed up with Santander and they suggested a refund of £254 and then revised to £156 based on NOT charging me a FURTHER 58 days interest on top of the settlement figure that included 58 days penalty interest they first gave back in May; we settled several day before this May figure timed out). I smell something seriously wrong here as they INSIST you settle online as they wont take debit card payments but then immediately 'auto' add 58 days from that day.

Does anyone know how I should escalate this fraud to avoid people being stung and especially as most people wont even notice - particularly as ALL these PCP people don't give detailed breakdowns and so you have to 'trust' their figures.

PCP (with its shiny suit salesroom smoke and mirrors and deceit/fudge) is due a huge kick up the backside as I fear it the next sub prime type scandal!

uknick

880 posts

183 months

Tuesday 25th July 2017
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The PCP car selling issue has been highlighted a number of times over the last few months in the media and now by the Bank of England.

It never surprises me how short people's memories are. Just 10 years ago when we had that "issue" with global finance, part of which was down to sub prime lending and lending to those that couldn't really afford it.

bmwmike

6,918 posts

107 months

Tuesday 25th July 2017
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Just when I think I understand PCP I realise I really don't! Hence why I bought my car with a 5yr loan at 3.3% as I know exactly what it is costing.

anonymous-user

53 months

Tuesday 25th July 2017
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Ken Figenus said:
I just ...... swapped a car loan from Sainsburys to a 1.5% cash advance on a credit card for 18 months for my car.
Have I understood this correctly - you're borrowing money on a credit card to fund car purchase, so will be paying the credit card interest (about 20% p.a.?)plus a 1.5% one-off fee?

If the credit card is cheaper, what were Sainsburys charging for their loan? yikes

Or have I misunderstood?



Ken Figenus

Original Poster:

5,678 posts

116 months

Tuesday 25th July 2017
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The credit card is a 1.5% fee for 18 months interest free borrowing mate. That Sainsburys one it paid off was 3.9% . I love interest rates Top Trumps!

Ken Figenus

Original Poster:

5,678 posts

116 months

Tuesday 25th July 2017
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bmwmike said:
Just when I think I understand PCP I realise I really don't! Hence why I bought my car with a 5yr loan at 3.3% as I know exactly what it is costing.
Exactly mate - there is so much smoke and mirrors in the showroom - its all based on 'what do you want to pay every month' rather than clear line items and overall costs to own (or not ever own)!. You have to dig in for those!

I've killed the PCP's on both DD's now (got 2.8% with Nationwide for my DD) and it means about £40 extra payment per month and about 5 months longer term than the PCP but that kills the balloon as you pay off 100% actual debt rather than some capital and lots of interest,. Made sense to me!

anonymous-user

53 months

Tuesday 25th July 2017
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Ken Figenus said:
The credit card is a 1.5% fee for 18 months interest free borrowing mate. That Sainsburys one it paid off was 3.9% . I love interest rates Top Trumps!
So how does the credit card "interest free" offer work? Do you have to transfer an existing balance or can you simply apply for the card and then draw down an interest free cash balance? You said you'd used it to pay off a car loan so it's presumably not a credit card balance transfer.

Ken Figenus

Original Poster:

5,678 posts

116 months

Tuesday 25th July 2017
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It was a cash transfer to my current account using a card I have had for years but is used only for this type of 'offer' purpose. Usually the cash transfers are not as advantageous as teh deals to 'transfer a balce' from another CC but in this case a 1.5% fee for the cash transfer amount and then interest free over 18 months made good sense.

Sorry if I didnt make it clear that the percentage rate is a fee on the amount transferred rather than an interest rate. It was Barclaycard Platinum Visa.