Car Finance Settlement calc

jay lazy

I have car finance outstanding and unfortunately I'm in negative equity.

I've come to learn about the 1/3 and 1/2 rule and have calculated the appropriate amount.

Unfortunately I have since learned that this amount includes a the deposit/trade in amount which seems incredible to me as this portion I feel is separate to the amount of finance provided. Can anyone explain this?

Also as this deposit amount was actually fraudulent do I have any recourse in terms of revising the HP agreement to reflect the true figures or go flat out for the HP agreement being null and void, there are mitigating factors in how I ended up signing up to such an agreement which I cannot go into here.

One last thing the settlement figure that they quote you over the phone seems far too high to me, I know these loans are heavily front loaded but does anyone know if the deposit amount affects this? e.g. the deposit/trade in amount was overstated by €7,000, 21 months later is this affecting the settlement figure?

many thanks

JL

Pablo Sanchez

The minute you drove the car out of the garage you were in negative equity.

jay lazy

why because the deposit was overstated or you just feel this way about all car finance?

Pablo Sanchez

" "
Thats me holding my hands up! True enough i forgot about your deposit, just meant that whatever you paid for it its devalued the moment you drove it.

daithimac

why is it unfortunate for you that your deposit is being factored into the half and 3rd rule?

copacetic

jay lazy wrote: »

Unfortunately I have since learned that this amount includes a the deposit/trade in amount which seems incredible to me as this portion I feel is separate to the amount of finance provided. Can anyone explain this?

the inclusion of the deposit should make it much easier to get to half for the rule if anything.

Not sure why anyone would think the deposit shouldn't be included in the calculation. It's part of the value of the car that you financed, it's inlcuded as that money is now in the car which goes back to the finance company if you default on the loan.

jay lazy

The higher deposit figure leads to a higher value on the 1/3 and 1/2 rule, hence it will take longer for it to come into effect. The deposit is included in the total Hire purchase price and so a third or half of it will be higher.

My question is whether or not this deposit figure effects the settlement amount.

Can anyone confirm?

JL

daithimac

the settlement is based on the balance owing less a rebate of the remaining interest. the interest is calculated on the basis of the amount outstanding over the period of time it is due. how the rebate is calculated exactly varys and is an element of market competition and can vary from bank to bank.

the deposit increases your half or third by half. the full sum of the deposit can be used to bring you over these figures.

copacetic

jay lazy wrote: »

The higher deposit figure leads to a higher value on the 1/3 and 1/2 rule, hence it will take longer for it to come into effect. The deposit is included in the total Hire purchase price and so a third or half of it will be higher.

My question is whether or not this deposit figure effects the settlement amount.

Can anyone confirm?

JL

I really don't get how you think that is the case.

Lets look at a (overly simplistic) example.

You pay a 5k deposit on a 25k car, the interest will be 5k.
Total hire purchase price is 30k.

You have to pay 5k in payments to get to 1/3 and 10k in payments to get to half.

You pay no deposit and lets say the interest is still 5k (it'd be more in reality).

You have to pay 10k in payments to get to 1/3 and 15k in payments to get to half.

In the second case of no deposit you are either paying longer or paying more a month. The more you paid as a deposit the better off you are.

jay lazy

copacetic wrote: »

I really don't get how you think that is the case.

Lets look at a (overly simplistic) example.

You pay a 5k deposit on a 25k car, the interest will be 5k.
Total hire purchase price is 30k.

You have to pay 5k in payments to get to 1/3 and 10k in payments to get to half.

You pay no deposit and lets say the interest is still 5k (it'd be more in reality).

You have to pay 10k in payments to get to 1/3 and 15k in payments to get to half.

In the second case of no deposit you are either paying longer or paying more a month. The more you paid as a deposit the better off you are.

It's stated on the finance agreement that the 1/3 and 1/2 rule is on the TOTAL hire purchase agreement

Imagine finance of €40k on a €50k car over five years. 40 x €20 per month is €800 per month by 60 months

€800 x 60 months =€48,000

plus €10k deposit

TOTAL hire purchase price is €58,000

1/3 is €19,333
1/2 is €29,000

If that deposit would have been €5k the TOTAL hire purchase price the €48k plus the €5k and a lower 1/3 and 1/2 amount would result

jay lazy

daithimac wrote: »

the settlement is based on the balance owing less a rebate of the remaining interest. the interest is calculated on the basis of the amount outstanding over the period of time it is due. how the rebate is calculated exactly varys and is an element of market competition and can vary from bank to bank.

Thanks for this, so it's right to think that the deposit will play no part in the calculation of the settlement?

the deposit increases your half or third by half. the full sum of the deposit can be used to bring you over these figures.

can you explain the second sentence? not sure how the deposit can be used to bring it over the figures.

If the deposit was lower(and more accurate to the agreed deal) the 1/3 and 1/2 amount would be lower

copacetic

jay lazy wrote: »

It's stated on the finance agreement that the 1/3 and 1/2 rule is on the TOTAL hire purchase agreement

Imagine finance of €40k on a €50k car over five years. 40 x €20 per month is €800 per month by 60 months

€800 x 60 months =€48,000

plus €10k deposit

TOTAL hire purchase price is €58,000

1/3 is €19,333
1/2 is €29,000

If that deposit would have been €5k the TOTAL hire purchase price the €48k plus the €5k and a lower 1/3 and 1/2 amount would result

thats not how it works. if the deposit was only 5k then you would have had to pay more than 800 a month to get the car paid in the same period and you would have paid more interest taking you much longer to get to half. the deposit comes off at the start, it's not added on at the end.

You really need to talk to someone who understands the figures better than you do.

jay lazy

copacetic wrote: »

thats not how it works. if the deposit was only 5k then you would have had to pay more than 800 a month to get the car paid in the same period and you would have paid more interest taking you much longer to get to half. the deposit comes off at the start, it's not added on at the end.

You really need to talk to someone who understands the figures better than you do.

maybe I should have explained it better, the inflated deposit led to an inflated purchase price, the amount to finance was always going to be the same

daithimac

I take it that your looking to give the car back to your finance company.

basically what I am saying can be outlined in two examples. in both you paid 15k.

example one, you were financed 40k your half is 20k you need to pay 5k to get to half.

example two, you were financed 40k on top of 10k deposit. your half is 25k. including your deposit you have paid 25k. you are at your half.

the examples do not take charges into account.