Ocean Finance Hell

mooky32

Hi Experts,

I am humbly seeking some advice regarding an Ocean Finance loan.
My girlfriend took out a 15k loan with this crowd about 6 years ago and secured it on her mother's house.

We have been together about 5 years and I knew about the loan but not the identity of the lender. Well as you can see I know now and have also found out that the loan is at an incredible 29.9% APR.

I nearly freaked on hearing this, and she informs me that as of last balance check (she is paying about 250 quid a month , for last 5 years as I say) she owes 19k!!!

She was in trouble at the time with a not fantastic credit record and I think went into this without fully understanding the terms.

Any advice guys? Is there any way to get that apr reduced or switch lender without massive penalty? Any legal angle available?

We are based in Scotland , I realise this may impact some legal options.

I can't tell you how furious I am with this situation, legislation needs to be brought in to stop these companies praying on the financially vulnerable.

Many thanks in advance.

Mooks

sdooley

Generally Mooks you can get round penalties on most loans by 'overpaying' in chunks rather than clearing the entire balance. 'Overpaying' (even if £18K of the £19K balance) generally doesn't trigger the 'rule of 78' penalty clause.

mooky32

Hey Bud,

Thanks for the response. Can you be a little more specific as to the implications of the 78 rule?

What are the rules on maximum settlement of a 15k loan even at that ridiculous APR?

If we offered to pay off the full amount after 5 years is the settlement amount likely to be more than the original loan value?

I am not sure of the term of the loan but I imagine its at least 10-15 years.

Many thanks in advance

Mooks

Salazar_2

mooky32 wrote: »

Hey Bud,

Thanks for the response. Can you be a little more specific as to the implications of the 78 rule?

What are the rules on maximum settlement of a 15k loan even at that ridiculous APR?

If we offered to pay off the full amount after 5 years is the settlement amount likely to be more than the original loan value?

Check your T&Cs for early repayment penalties. Some lenders will let you pay it off but will ask for, say, 6 months interest as a penalty in addition to the amount currently outstanding. I work in this market (in Scotland) and she should be able to get a better deal than that especially as she's been paying it regularly for 6 years and can show some degree of reliable payment history.

sdooley

Sorry I misread slightly - firstly the balance will only be higher than the amount borrowed if your other half took out further borrowing and/or missed payments. Tell her there's no shame in admitting everything.

The lender will generally quote two figures - the 'current balance of the loan' and the 'settlement figure'. I assume £19K is the settlement figure (which is higher than the balance of the loan because of the use of the rule of 78 - all you need to know is its a rule to make more money). If you find out the current balance of the loan and make overpayments less than that balance, it will generally reduce the loan outstanding directly. The regular £250 payments will then go mostly to paying off the remaining capital rather than interest.

e.g.

'current balance' £17,000
overpayment £16,000
remaining balance £1,000
4 x £250 regular payments + 4 months interest on £1,000 = £200 max = debt paid off in 5 months for £17,200.

'current balance' £17,000
'settlement figure' £19,000

If you repay by settlement you are worse off.

mooky32

Gents,

thanks for the information.

The current balance as of 2 weeks ago was 19k so I can't estimate what the final payment settlement would be, hopefully not much more.

So in summary your advice would be , in the case of say the final settlement is in fact 19k to:

perhaps get a reasonable rate loan for 18k, then pay off the remaining debt over a few months.

That I think can be arranged.

Thanks for the advice, your input is genuinely appreciated.

Mooks