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Hi

 

Could somebody please advise me with regard to paying off our combi boiler. About 3 years ago we had a combi boiler installed by British gas. The salesman arranged for finance via First National.

We just enquired about our balance and realised we still owe a large amount. After checking the documents we noticed the following:

 

The cash price was £3385.75

The APR was 19.6%

The monthly interest was 1.46%

The credit amount was £3215.75

120 monthly payments of £56.00

 

As of today our balance is £3200

 

My question is: Does the credit amount sound right? It's almost double the cash amount and we are not sure how they worked this out.

I also need to mention that we currently pay more than the normal monthly instalment as we missed some payments. We will probably repay the amount in much less than 120 months.

 

Please advise.

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Curious figures - are they correct or have you approximated.

 

A monthly rate of 1.46% is an actual annual rate (AAR) 18.99762%. The only way to get an APR that much higher than the AAR is if there were additional costs such as a start up fees or compulsory insurance. Are they charging a monthly fee?

 

(APR = compulsory costs + interest payments expressed in percentage terms to one decimal place. Because the lender will do his best to squeeze every penny the calculation will probably show the calculated rate to be .19.649% rounded to give an APR of 19.6%)

 

Was there a discount on the cost price or did you pay something up front to get a credit amount lower than the cost price.?

 

You do not say how many payments you missed nor the monthly payment amount subsequent to this. There may well be steep (and unlawful) penalty charges for the missed payments. Have you got a full statement from them. If you have post it and I will look at it and see what they have done and whether they are correct. If not you must ask them for a full statement from the time the account was started.

 

Have you got a copy of the Consumer Credit Act agreement that governs this loan. If not it would be as well to ask for it, You will find a template letter is available you must send a fee of £1. ( modify letter number 8 in the debt collectors library)

 

For your information to pay off a a loan of 3215.75 at 1.46% monthly would require 120 payment of 56.95 (so it would appear that you have approximated)

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cds

 

I worked the APR from the OPs monthly rate of 1.46%

 

AAR%= ((1+1.46/100)^12-1) *100. =18.9976 an APR of 19%

 

Using monthly rate as 1.46% I make the monthly payment to be 56.95.

 

Using the original loan as 3215.75 payable by 120 monthly payments of 56.00 I made the monthly rate = 1.421278 giving an AAR of 18.453% and %APR = 18.5

 

Clearly we do not have the correct story from the OP but I am intrigued to know what you are doing to get %APR = 16.8 cos I cannot get this figure anyway I juggle the sums.

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Thanks for all the help. I can confirm that the figures are correct and taken directly from the agreement. I'll write to them and get a full statement.

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Can you post a copy of the agreement - block out anything that might identify you.

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img029.jpg

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Google Photobucket

 

Use The Upload Link For Message Boards With Out Thumbnails Option To Post

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The monthly payment was £56.95 as predicted.

 

The APR is higher than the AAR for a monthly rate of 1.46 because of the £55 acceptance fee.

 

I do not like the 1/12 being 'the monthly equivalent of such charge'. This suggests they are using the simple interest rate [problem].

 

Monthly rate does not equal annual rate /12 but

 

((1+annual rate /100)^(1/12)-1)1*100.

 

It would be interesting if you can be bothered to ask them what annual rate they have used and their method of calculating the monthly rate.

 

Can you confirm that what you have posted is only part of the agreement. Somewhere the ' Consumer Credit ACt (1974) ' should appear.This ought to be at the top of the document but at the very least it sould be in the signature block.

 

You do need to get full accounts so that these can be checked and to judge whether the late patments have been dealt with fairly.

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