Settlement figure on Hp finance

[fairy dust 49]

Hi hope some one can help me out ,2 yrs ago I offered to put my name on a hp for my son ,this was for him to get furniture and dining room suite total cost came to £1200.00 and finance is with BH. My son was making regular payments into my bank account for 12 months and then stopped paying ,so I have carried on with payments yes I need reallity check as a parent .Today I looked at paper work which states hp is for 48 months,from what I have worked out what is owing comes to just over £450.00 so I telephoned BH for a settlement figure and they informed me that it is £578 ,asked them why this much and was told that it includes the interest to the end of agreement which is April next year.Is this correct that the interest has to be added for full 12 months still owing even if you pay 12 months early,as I was going to give them full payment of the £450 ,but now they have added near on £100 extra that plan has gone out the window.Advice much appreciated.

[labman]

Re: Settlement figure on Hp finance

Many such loans are front loaded, so you pay the interest first, then start eating into the capital.

Unfortunately I think you will find it is all above board. I sincerely hope someone will prove me wrong though. :beagle:

[fairy dust 49]

Re: Settlement figure on Hp finance

Thank you Labman,I wasn`t to sure as I thought they deducted so much off if it was payed in full early.

[Lord_Alcohol]

Re: Settlement figure on Hp finance

I think if it is a standard regulated HP agreement then it should be subject to the early settlement regs and a rebate should be offered. Labman is right but if this is just standard HP with no balloon payment and ownership of goods yours at the end of the contract then the regs will apply;

http://www.legislation.gov.uk/uksi/2.../contents/made

and there's a nasty-looking formula (S4) for working out the rebate but you can always do this yourself at;

http://www.financecalcs.co.uk/Calcs/Settlement.php

If the lender is demanding payment of interest to the end of the agreement without calculating a rebate then he is probably in breach of the regs. I would contact him and ask what the rebate (if any) is and, if it is nothing, why that is so.

HTH
LA

[fairy dust 49]

Re: Settlement figure on Hp finance

Thank you for your response Lord-Alcoho, no demands are being made for full payment and the interest rates are added after the DD have been received each month similar to having credit card interest each month,hense the reason for me thinking that a settlement figure would have been lower than what they told me via phone call.