How do we calculate settlement figures?

Settlement figures are calculated in accordance with the rules of the Consumer Credit Act 1974.
Under these rules, if you settle your agreement early you are entitled to a rebate of interest.
The way in which the rebate is calculated is referred to as the Actuarial method.

Example: If you take out a HP Car Finance product for £5,000 to be repaid over 48 monthly instalments at an APR of 14.0%, you will pay the first month’s interest on £5,000 but after that you will only pay interest on the balance each month.

- The Repayment amount is the agreed fixed amount you pay each month and includes interest.
- The Interest amount is calculated on the closing balance and reduces each month, therefore you pay less interest each month.
- The closing balance reduces by the Repayment amount, and increases by the interest amount each month.

example

The application shown above will apply to every agreement, but the figures will change depending on the term, interest charged and amount financed.

Your agreement shows the details of how much you have financed, the interest rate and the term length.

Each repayment you make is made up of both capital and interest and the proportion of capital and interest will vary each month. In the earlier months of your agreement, you will pay more interest than in the later months of the agreement.

Settlement figures are valid for 28 days after the date requested; referred to as the Settlement Date.

The settlement figure includes an additional 30 days of interest after the settlement date as allowed under the Consumer Credit Act 1974, this is refered to as the Deferred Date.

Settlement figure calculation:
Once the settlement date has been decided, we calculate your settlement figure by taking the current balance of all remaining repayment amounts on your account, minus your calculated Rebate of Interest.

The Rebate of Interest figure is the balance of all remaining interest amounts on your account from the deferred date.

To find out what your current settlment figure is please call 01244 200746.

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