Question re hire purchase agreements

[Vanilla]

If one wants to end a fixed rate hire purchase agreement early by buying out the agreement and goods, there is a section under the consumer credit act whereby the company has to give you a certain discount on the hire purchase price ( s.53) but the section merely says that it is to be fixed by the central bank- does anyone happen to know what or how this discount is calculated? Have been on to the financial regulator and they don't know off hand.

 

[Vanilla]

Have the answer to this now. Although the Act says that the Central Bank will set a discount to be followed by firms, they have not in practice done so. Therefore the discount is at the discretion of the individual companies offering the HPAs. Am i the only one who thinks this is a fundamental flaw?

 

[Thrifty]

I agree totally - i understand there was some sort of calculation but each creditor can/ may use a different way of doing it or a slightly different calculation. What you are actually getting is an interest rebate. The interest is calculated over five years on the Hp - you are paying back say in three so this is where the pay back comes from. Obviously the nearer the end of the loan the less if anything you get. i suggest ringing the HP company and advising you are considering clearing the HP and asking for a settlement figure and a breakdown of this showing the interest rebate given. then you can at least study the way they have calculated it.

 

[Vanilla]

Thanks Thrifty. I had the settlement calculation but I wanted to be sure they were following what I thought should be a certain format laid down by the central bank. Although as it turns out there is no such format therefore there is little point in even looking at the calculation since it is up to the company themselves to decide what calculation to use or what discount to apply.

In this case between the original settlement figure and the one they ended up offering after a fair bit of haggling I ended up getting over two thousand more of a discount for the client. So anyone else out there ending a HPA early- the message is haggle.