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  • FIRST POST
    • toastergirl
    • By toastergirl 9th Oct 16, 4:53 PM
    • 1Posts
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    toastergirl
    Personal loan - wrong information given
    • #1
    • 9th Oct 16, 4:53 PM
    Personal loan - wrong information given 9th Oct 16 at 4:53 PM
    I took out a personal loan with HSBC almost 2 years ago and they gave me wrong information about paying it back. I didn't do anything at the time as I assumed that since I had signed all of the terms and conditions, even though they told it to me wrong, there would be nothing I could do about it (although I can't find the contract anymore so not sure exactly what it says).

    When applying, I stated that I only needed a certain amount of money but the advertised interest rate was lower if you took out £1000 more than what I needed so we went with that amount instead. They did all the credit checks and came back with an interest rate significantly higher than the one advertised so I asked if we could see how much it was at £1000 less. They said it was unwise to run another credit check as it would affect my credit rating but that if I just paid off the £1000 immediately (there was no penalty for finishing early or overpayments), the interest would be recalculated so the cost of the loan and therefore the interest would drop.

    I paid £1000 2 days later over the phone and they confirmed that the total I owed be recalculated but that never happened. About a month and a half later I had another £1000 which I could pay off early so called them to find out why the interest hadn't changed and then I would pay over the phone at the same time. After ages on the phone being transferred to different people, eventually I was told that the interest would only be recalculated when the loan was written off. Stupidly I didn't process what that meant until later and when she asked if I still wanted to pay the extra £1000 I said yes.

    Now the issue is, I paid off £2000 of this loan which could have been gathering interest in another account for 2 years (plus another 10 months or so to go) and then paid off early at the end. But instead I thought that paying off the loan meant that the interest would be adjusted straight away which it wasn't.

    So, advice please! Are they legally in the wrong? Can I do anything to get something back?

    Thanks in advance for your help.
Page 1
    • Nearlyold
    • By Nearlyold 9th Oct 16, 5:24 PM
    • 728 Posts
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    Nearlyold
    • #2
    • 9th Oct 16, 5:24 PM
    • #2
    • 9th Oct 16, 5:24 PM
    I think there has just been a bit of confusion during your conversation with the bank staff, they have to reduce the interest charged to take account of the additional payment from the date of the over payment (or from up to 58 days after the overpayment for loans that charge for early settlement) This will either shorten the term but keep the same payment, or reduce the payment but keep the original term. I believe with HSBC the payment remains the same which will shorten the term.

    In order to clarify what's happening can I ask are you still making the same monthly payment as originally agreed or has your monthly payment reduced?
    Last edited by Nearlyold; 09-10-2016 at 5:54 PM.
    • Thrugelmir
    • By Thrugelmir 9th Oct 16, 6:06 PM
    • 51,268 Posts
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    Thrugelmir
    • #3
    • 9th Oct 16, 6:06 PM
    • #3
    • 9th Oct 16, 6:06 PM
    I believe with HSBC the payment remains the same which will shorten the term.
    Originally posted by Nearlyold
    By default term reduces when overpayments are made. Contractually the monthly payments will remain the same.

    Interest is calculated and charged monthly. In making overpayments you are saving money. Ask HSBC for a full statement of your loan account. This should make the situation clearer.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • jonesMUFCforever
    • By jonesMUFCforever 9th Oct 16, 6:52 PM
    • 23,190 Posts
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    jonesMUFCforever
    • #4
    • 9th Oct 16, 6:52 PM
    • #4
    • 9th Oct 16, 6:52 PM
    Interest is calculated daily and charged monthly to your personal loan.
    You have paid £1000 almost immediately so you wil not be charged interest on this.
    As your repayments are the same the result is that you clear the loan 4-5 months early.(Difficult to be exact as we don't know the amount of loan,over how long and at what rate)

    You have saved money by doing this and no refund of interest is due to you now.
    What goes around - comes around
    give lots and you will always receive lots
    • Nearlyold
    • By Nearlyold 9th Oct 16, 7:07 PM
    • 728 Posts
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    Nearlyold
    • #5
    • 9th Oct 16, 7:07 PM
    • #5
    • 9th Oct 16, 7:07 PM
    By default term reduces when overpayments are made. Contractually the monthly payments will remain the same..
    Originally posted by Thrugelmir
    Actually from a regulatory perspective its only the default position in so far as the lender chooses it to be, the European Consumer Credit Directive specifically allows for either method of adjustment ie reduce term or reduce payment but leaves it to the discretion of the lender to choose which method to use, the lender can use either method or both should they wish to. The consumer cannot insist on a method the lender does not wish to offer.
    Last edited by Nearlyold; 09-10-2016 at 7:09 PM.
    • Mr.Generous
    • By Mr.Generous 9th Oct 16, 7:59 PM
    • 893 Posts
    • 1,065 Thanks
    Mr.Generous
    • #6
    • 9th Oct 16, 7:59 PM
    • #6
    • 9th Oct 16, 7:59 PM
    I would also like to speculate that the £2000 in a savings account for 2 years would generate almost enough for a chippy tea, with current interest rates I wouldn't be too worried.
    • Thrugelmir
    • By Thrugelmir 9th Oct 16, 9:05 PM
    • 51,268 Posts
    • 43,074 Thanks
    Thrugelmir
    • #7
    • 9th Oct 16, 9:05 PM
    • #7
    • 9th Oct 16, 9:05 PM
    Actually from a regulatory perspective its only the default position in so far as the lender chooses it to be, the European Consumer Credit Directive specifically allows for either method of adjustment ie reduce term or reduce payment but leaves it to the discretion of the lender to choose which method to use, the lender can use either method or both should they wish to. The consumer cannot insist on a method the lender does not wish to offer.
    Originally posted by Nearlyold
    I know this applies to mortgages (i.e. secured lending). Has the EU issued a credit directive on unsecured lending?
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • Nearlyold
    • By Nearlyold 9th Oct 16, 10:20 PM
    • 728 Posts
    • 573 Thanks
    Nearlyold
    • #8
    • 9th Oct 16, 10:20 PM
    • #8
    • 9th Oct 16, 10:20 PM
    I know this applies to mortgages (i.e. secured lending). Has the EU issued a credit directive on unsecured lending?
    Originally posted by Thrugelmir
    Yes
    http://ec.europa.eu/consumers/financial_services/consumer_credit_directive/index_en.htm

    https://www.gov.uk/government/publications/consumer-credit-regulation-guidance-on-the-regulations-implementing-the-consumer-credit-directive-updated-for-eu-commission-directive-2011-90-eu-effective-1-january-2013

    See also Nat West's position who appear to offer the option to reduce payments or shorten the term
    https://supportcentre.natwest.com/app/answers/detail/a_id/4031/~/can-i-make-an-extra-payment-on-my-loan%3F
    Last edited by Nearlyold; 10-10-2016 at 6:17 PM.
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