managed loan extortionate apr

kevinelly

What it doesn't tell you is that if interest rates rise over the term of the loan your payments may not pay the loan off and you will still be left with a debt at the end of the loan. The APR is variable and the payment is a minimum but they do not tell you that you can pay more off. I have been there with this and have lodged complaint with Financial Ombudsman - ongoing. I had 18K managed loan. After paying for four years I have paid almost £12K and the balance has reduced by about £1500. HSBC have previously been criticised about putting people on managed loans but it does not seem to have made a difference. Complain!

CLAPTON

from the somewhat limited information, the loan rate seems around 12-13 % which doesn't seem too bad

if you have had lots of bank charges then best to read the charges reclaiming thread

moneysavingallday

kevinelly wrote: »

I had 18K managed loan. After paying for four years I have paid almost £12K and the balance has reduced by about £1500. HSBC have previously been criticised about putting people on managed loans but it does not seem to have made a difference. Complain!

I don't believe you.

ShelfStacker_3

moneysavingallday wrote: »

I don't believe you.

Same. Doesn't mathematically stack up that the interest could be so much that £12ks worth of payments could shrink to £1.5k.

kevinelly

Seriously - you can believe me. My payments have been £280 per month since loan agreed in December 2004. Here are some extracts from my letter of complaint to HSBC from August 2008. The figures are accurate to the penny:

"After getting myself into financial difficulties throughout 2004 I had an overdraft agreement with HSBC for about £1,000 and a Personal Loan of approximately £17,000. Having had difficulty meeting payments I asked for the period of my overdraft to be extended and was told that the only way that HSBC could help me further was to be put on a managed loan. This was to consolidate my borrowings in the sum of £18,650.00. The interest was 16.9% APR at the time of the loan being taken out. Since this interest rate was so high, before agreeing to the loan, I asked during my telephone call with the HSBC staff if I would be able to switch to a less costly loan at a later date once my affairs were more in order. I was told that if my account had been conducted satisfactorily this would be possible.

I applied after three years and nine months to be transferred to a personal loan. My application was declined on the grounds of it being unaffordable – payments were to rise by £10.00 per month although the loan would be over a much shorter period and at the same time my renegotiated mortgage, that had been paid without default for the previous three years, was to reduce my monthly payments by approximately £145 per month. .....

To date I have made payments totalling approximately £11,760.00 over 43 months and the balance of the loan has reduced from £18,650.00 to £17,168.81. Since I have been refused a more affordable product I must continue to pay these extortionate rates."

What's more they will not let me move to a mainstream cheaper product even though my account has been in good order for some considerable time. At the time that the managed loan was taken the interest rate was 16.95%. HSBC managed loans are charged at 10.95% above HSBC bank base rate, variable at the bank's discretion although they have told me that they are not obliged to tell you about changes to the interest rate - I was certainly never informed of any changes. I discovered that the rate that I was paying in July 2008 was nearly 19%. Futhermore I have been told that because interest rates have risen I will be left with a substantial debt outstanding at the end of the loan since my payments have been fixed whilst the interest rate has beenn variable.

Do you really think I would make complaints with contrived figures to the Financial Ombudsman?

Shelf stacking would be a much more honest profession!

kevinelly

Seriously - you can believe me. My payments have been £280 per month since loan agreed in December 2004. Here are some extracts from my letter of complaint to HSBC from August 2008. The figures are accurate to the penny:

"After getting myself into financial difficulties throughout 2004 I had an overdraft agreement with HSBC for about £1,000 and a Personal Loan of approximately £17,000. Having had difficulty meeting payments I asked for the period of my overdraft to be extended and was told that the only way that HSBC could help me further was to be put on a managed loan. This was to consolidate my borrowings in the sum of £18,650.00. The interest was 16.9% APR at the time of the loan being taken out. Since this interest rate was so high, before agreeing to the loan, I asked during my telephone call with the HSBC staff if I would be able to switch to a less costly loan at a later date once my affairs were more in order. I was told that if my account had been conducted satisfactorily this would be possible.

I applied after three years and nine months to be transferred to a personal loan. My application was declined on the grounds of it being unaffordable – payments were to rise by £10.00 per month although the loan would be over a much shorter period and at the same time my renegotiated mortgage, that had been paid without default for the previous three years, was to reduce my monthly payments by approximately £145 per month. .....

To date I have made payments totalling approximately £11,760.00 over 43 months and the balance of the loan has reduced from £18,650.00 to £17,168.81. Since I have been refused a more affordable product I must continue to pay these extortionate rates."

What's more they will not let me move to a mainstream cheaper product even though my account has been in good order for some considerable time. At the time that the managed loan was taken the interest rate was 16.95%. HSBC managed loans are charged at 10.95% above HSBC bank base rate, variable at the bank's discretion although they have told me that they are not obliged to tell you about changes to the interest rate - I was certainly never informed of any changes. I discovered that the rate that I was paying in July 2008 was nearly 19%. Futhermore I have been told that because interest rates have risen I will be left with a substantial debt outstanding at the end of the loan since my payments have been fixed whilst the interest rate has beenn variable.

Do you really think I would make complaints with contrived figures to the Financial Ombudsman?

Shelf stacking would be a much more honest profession!

clou19750

I took out natwest loan in 2005 for 8,000.... at first the balance wasnt going down much................ but now interest is paid off and the remaining is reduced .... have 16 months left now! Cant wait!

kevinelly

Sorry. Don't know what happened there. Obviously poste twice!

PROLIANT

So you have paid £12k and the debt has only reduced by just over a grand!!!!!!!! !!!!!! is going on here? If I was you and I normally will not condone this...bump the lot! Walk away and hide for a couple of years then if you are caught up with just deny it till the cow's come home, until the six years from default has elapsed the debt will be wiped.

CLAPTON

kevinelly wrote: »

Seriously - you can believe me. My payments have been £280 per month since loan agreed in December 2004. Here are some extracts from my letter of complaint to HSBC from August 2008. The figures are accurate to the penny:

"After getting myself into financial difficulties throughout 2004 I had an overdraft agreement with HSBC for about £1,000 and a Personal Loan of approximately £17,000. Having had difficulty meeting payments I asked for the period of my overdraft to be extended and was told that the only way that HSBC could help me further was to be put on a managed loan. This was to consolidate my borrowings in the sum of £18,650.00. The interest was 16.9% APR at the time of the loan being taken out. Since this interest rate was so high, before agreeing to the loan, I asked during my telephone call with the HSBC staff if I would be able to switch to a less costly loan at a later date once my affairs were more in order. I was told that if my account had been conducted satisfactorily this would be possible.

I applied after three years and nine months to be transferred to a personal loan. My application was declined on the grounds of it being unaffordable – payments were to rise by £10.00 per month although the loan would be over a much shorter period and at the same time my renegotiated mortgage, that had been paid without default for the previous three years, was to reduce my monthly payments by approximately £145 per month. .....

To date I have made payments totalling approximately £11,760.00 over 43 months and the balance of the loan has reduced from £18,650.00 to £17,168.81. Since I have been refused a more affordable product I must continue to pay these extortionate rates."

What's more they will not let me move to a mainstream cheaper product even though my account has been in good order for some considerable time. At the time that the managed loan was taken the interest rate was 16.95%. HSBC managed loans are charged at 10.95% above HSBC bank base rate, variable at the bank's discretion although they have told me that they are not obliged to tell you about changes to the interest rate - I was certainly never informed of any changes. I discovered that the rate that I was paying in July 2008 was nearly 19%. Futhermore I have been told that because interest rates have risen I will be left with a substantial debt outstanding at the end of the loan since my payments have been fixed whilst the interest rate has beenn variable.

Do you really think I would make complaints with contrived figures to the Financial Ombudsman?

Shelf stacking would be a much more honest profession!

the maths is quite simple

if you owe £18,000 and are being charged 16.9% then you are being charged about £ 254 per month in interest and if you are only paying 273 per month then your loan is only being reduced by £19 per month


so yes the figures can easily be true....

basically you have agreed to a loan over about 25 years....
if you want to pay it off more quickly then you need to pay more per month.