Not upheld: incorrect interest calculation and charges complaint against Volkswagen Financial Services (UK) Limited

Decision detail

Summary

Mr M complained that VWFS incorrectly calculated interest on his hire purchase agreement for a used car, alleging that interest was applied to an inflated balance and that deposits were not deducted before applying interest. He also complained that additional items such as a service plan had attracted interest. VWFS rejected the complaint, explaining that the agreement was set up correctly and interest was calculated on the correct amount of credit. The ombudsman upheld VWFS's position, finding that the amount of credit of £6,719 was correctly calculated and consistently documented, that higher statement balances reflected the normal operation of amortised agreements, and that additional items were properly itemised as part of the total price being financed.

The Ombudsman's reasoning

The ombudsman was satisfied that the amount of credit of £6,719 was correctly calculated as the vehicle cash price less the advance payment, and this figure appeared consistently across all documentation. The higher figures Mr M observed on statements reflect the normal operation of an amortised agreement where interest is front-loaded and the outstanding balance can appear higher at certain points. Additional items were properly itemised on the invoice as part of the total price being financed, so interest on these items was appropriate. The signed agreement clearly set out the terms and there was no evidence of misrepresentation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website