Car finance settlement figure

Yorky

I know someone who financed a car purchase very recently and they now want to settle the loan. The details are as follows:

Amount borrowed: €16645
APR: 6.9%
Term: 48 months
Monthly repayments: €396.20

They took out the loan in on January 28th (six weeks ago) and have made one repayment. By their reckoning the interest accrued should have been about €132 (16645 x 6.9%= €1148.51 / 52wks x 6wks). Adding this to the loan would make it €16777 minus repayment of €396.20 = €16380.80 balance.

Instead the settlement figure is €16880!

Does anyone know how this figure could have been arrived at?

Seth Brundle

Was there a penalty for settling before time?

Yorky

kbannon wrote: »

Was there a penalty for settling before time?

No, according to the finance company

Henry Ford III

The interest for the full term is added at the outset. It doesn't work like a term loan.

They'll discount most of the interest back and add an admin. charge.

Yorky

Henry Ford III wrote: »

The interest for the full term is added at the outset. It doesn't work like a term loan.

They'll discount most of the interest back and add an admin. charge.

Can they add an admin charge? Thayt would be a penalty of sorts which I was categorically told there wouldn't be.

Henry Ford III

Yorky wrote: »

Can they add an admin charge? Thayt would be a penalty of sorts which I was categorically told there wouldn't be.

Depends on the t's and c's.

An interest penalty and an admin./early settlement charge might be different things?

p.s. A documentation charge, payable at the start, is (or at least was) normal practice too.

Orando Broom

Yorky wrote: »

I know someone who financed a car purchase very recently and they now want to settle the loan. The details are as follows:

Amount borrowed: €16645
APR: 6.9%
Term: 48 months
Monthly repayments: €396.20

They took out the loan in on January 28th (six weeks ago) and have made one repayment. By their reckoning the interest accrued should have been about €132 (16645 x 6.9%= €1148.51 / 52wks x 6wks). Adding this to the loan would make it €16777 minus repayment of €396.20 = €16380.80 balance.

Instead the settlement figure is €16880!

Does anyone know how this figure could have been arrived at?

Yorky wrote: »

Can they add an admin charge? Thayt would be a penalty of sorts which I was categorically told there wouldn't be.

This friend, it's you isn't it?

MrDerp

The finance manager at the garage has already spent his/her bonus for flogging that finance deal. Finance company won't see itself out of pocket.

You were verbally told that there's no penalty for early payment? Is that on the contract signed? If its not on the sheet, it's not true.

I once had a finance manager extol the virtues of a 5.9% APR available because they were a main dealer. Why use up all of your cash, he asked, when you could take just a little bit of it on finance. Banks are nearly paying that in interest (they were at the time) so it'd be a free loan.

Why not, says I, and agreed to put 4K on finance over two years. Turn up to collect the car and he has a GE money docket for me with 17.5% APR and 88 euro up front (appended to first payment) admin charge. Laugh? I nearly died. Got a second bank draft for the balance. Cheeky bugger.

Yorky

Orando Broom wrote: »

This friend, it's you isn't it?

Categorically told by the debtor

Captain Commie

Yorky wrote: »

Categorically told by the debtor

and he read the finance agreement 100% and knows every single charge and clause i take it??

Personally it smells like an early termination fee regardless of what your "friend" says

Solnskaya

Heres where you need to put on your severe haggling hat and harden up your heart. If confronted with a closeish settlement figure offered in an uncompromising way, you will be amazed at the value you can extract. I financed a Relay van, paid the first 6 payments, got sick of the drip and went looking for a settlement figure. The figure offered by the lender was 16,700. I offered 11. They laughed a lot at me. I tossed the rep the keys. We settled on 11.5, I left with van and keys. No effect on credit rating, have financed 30k plus vehicles with same firm since.
It is a business transaction, and as with all such matters, a hard head is required. Offered a settlement figure of 16.8, I would counter with a settlement figure of 14 and work from there. They are flooded with repos and don't want another. Initially, your offer will be mocked, but you need to be adamant-they will try to allude that the figure is set in stone at 16.8, but its not. Or else you can pay 16.8, thats what most do, but its silly.

Yorky

Solnskaya wrote: »

Heres where you need to put on your severe haggling hat and harden up your heart. If confronted with a closeish settlement figure offered in an uncompromising way, you will be amazed at the value you can extract. I financed a Relay van, paid the first 6 payments, got sick of the drip and went looking for a settlement figure. The figure offered by the lender was 16,700. I offered 11. They laughed a lot at me. I tossed the rep the keys. We settled on 11.5, I left with van and keys. No effect on credit rating, have financed 30k plus vehicles with same firm since.
It is a business transaction, and as with all such matters, a hard head is required. Offered a settlement figure of 16.8, I would counter with a settlement figure of 14 and work from there. They are flooded with repos and don't want another. Initially, your offer will be mocked, but you need to be adamant-they will try to allude that the figure is set in stone at 16.8, but its not. Or else you can pay 16.8, thats what most do, but its silly.

This seems like good advice but apparently the lender is adamant the settlement figure is non-negotiable. How can this be got around?

Solnskaya

They are always adamant, until they meet someone who understands the real balance of power. It's a bit like Mcdonalds, its a balls thing. Next time you are in a McDonalds, take your food, go sit down, eat half your burger, then go back with it, and with a total poker face, say "this burger is off, could you please change it". And lo, they do. Just do it once, just for the fun of it. The same goes for Banks and finance companies. You can't take the total p1ss, but there is always a degree of commercial flexibility. You just have to barefaced offer YOUR settlement figure, and YOU have to be as adamant as they are. You genuinely have to be prepared to toss them the keys and say"so sue me for it then".
There are a lot of hard-headed types who will do exactly this, and it is my attitude in all dealings with large corporations-this is what you want,. this is what I will give you. There is always a large degree of wiggle room, sombody else will pay full whack to make up the loss. I know it sounds(and possibly is) a bit scangerish, but avoiding the aggro of chasing you for the last penny as opposed to a quick settlement has a value. Life is hard, so be hard.