IMPACT OF INTEREST RATE VARIATIONS
Novuna Business Finance
The Variable Rate Lease Purchase Agreement is linked to 3 Months Term Sterling Overnight Index Average (SONIA).
Whilst there is a fixed monthly payment taken by direct debit, any variation from the assumed interest as a result of changes in 3 Months Term SONIA will be added or deducted at the end of the agreement or at the time of early redemption.
The following examples provide an illustration of the impact resulting from a 1% variation in 3 Months Term SONIA:
Example 1:
Amount Financed: £75,000
Repayments: 48 monthly payments of £1,828.45
Assumed Funding Rate: 3 Month LIBOR of 0.55% + 7.35% = 7.9%
| 3 Months Term SONIA Rate Change | Capital Outstanding | Additional Interest Charges* |
| Increase of 1% one year after the start of the agreement^ | £58,403 | £1,119.26 |
| Increase of 1% two years after the start of the agreement^ | £40,447 | £487.38 |
| Increase of 1% three years after the start of the agreement^ | £21,019 | £122.54 |
Example 2:
Amount Financed: £125,000
Repayments: 48 monthly payments of £2,162.43 followed by a final payment of £50,000
Assumed Funding Rate: 3 Months Term SONIA of 0.55% + 7.35% = 7.9%
| 3 Months Term SONIA Rate Change | Capital Outstanding | Additional Interest Charges* |
| Increase of 1% one year after the start of the agreement^ | £108,331 | £2,879.07 |
| Increase of 1% two years after the start of the agreement^ | £90,296 | £1,621.92 |
| Increase of 1% three years after the start of the agreement^ | £70,784 | £685.84 |
^The example assumes no further change in the 3 Months Term SONIA rate for the remainder of the term. Should there be an increase of more than 1%, the additional interest charges would be approximately doubled if the increase was 2% and approximately trebled if the increase was 3% etc. *Additional interest charges are collected with the final payment or at the time of early redemption
IMPORTANT: Please note these examples are approximate and are for illustration purposes and the impact of any interest rate variation would be reduced in the event of early redemption. The examples would also differ should there be a difference in the timing of any interest rate variations.
Should you have any questions or require additional information, please contact us and we would be pleased to provide clarification.