rule of 78 early termination. business car loan

[frazmac]

We have a non- regulated lease purchasing agreement for a vehicle in which we are 1 year into a 4 year deal. We are looking to settle the agreement early and have been quoted the use of the rule of 78 plus 6 months penalty interest. This basically means that despite making payments for 13 months, we still owe more than the sum initially advanced.

Are there any guidelines to cover the amount of penalty interest which may be charged under this type of agreement?

[WendyB]

Re: rule of 78 early termination. business car loan

have a look on this thread, post #5 Firstplus Rule 78 calculations - Legal Beagles Consumer Forum

[shell]

Re: rule of 78 early termination. business car loan

Just a thought, isn't the rule 78 suppossed to be abolished this month or next month? If so it might be worth waiting the extra month or so.

[frazmac]

Re: rule of 78 early termination. business car loan

Thanks for the response guys.

According to the finance company, as this is a non-regulated agreement for finance to a business, the consumer rights do not apply and they do not have to give any rebate at all.

And I suspect that the abolition of the rule of 78 will only apply in relation to finance provided to a non-business consumer.

But i wondered if anyone had any information to the contrary.