Can a loan be recalled?

IcklePickle_2

I'm getting a bit concerned at the actions banks are taking now.

Credit Card limits are being reduced to almost nothing (happened to me with Barclaycard), APRs are being hiked (MBNA 34%), overdrafts are being recalled (example from Natwest on DFW forum tonight). Usually because something in the customer's credit profile looks 'risky'.

I'm just wondering, do you think it's possible for banks to recall loans in this way? Or is it different with a loan because it's a fixed-sum agreement?

Has anyone heard of this happening? Or any opinions as to the likelihood?

recyclingbox

interestingly, last april Barclaycard reduced my credit limit by £60, couldn't really see the point in that one.... then, just after Christmas i got a letter telling me they had put it up by a £1000. Couldn't see the point in that one either!!!!

Capital One have also put up credit limits on both mine and my wife's cards so not sure what is going on......

as to your question i would have thought the lender will be bound by the agreement which specifies a loan must pe paid in a set number of months. Don't really see how they could renege on a contract with fairly explicit terms?

But then again knowing how banks operate, anything could happen....

Rafter

IcklePickle,

As recyclingbox says, you have a contract to borrow a sum over a fixed term. Unless you default (ie don't keep up repayments) and break your contract with the lender they cannot demand repayment.

Until a year ago, most banks and credit card companies did not share data about balances of accounts that were up to date or the size of peoples overdrafts.

Now this data is shared and the banks can see how much some borrowers have access to they have started cutting limits.

Banks also have to hold capital and reserves against their credit limits, so if you haven't used your limit for a while, and you bank sees that you regularly pay in full and therefore don't make them much money they might cut the limit to save money.

R.

saza911

Interesting I've just put a post about this, Welcome Finance have just recalled an agreed loan with myself!

~Brock~

Lenders have no right to recall loans that are already running, and even if a lender went out of business, the loan would still be payable to whoever was administering the debt on behalf of the company at the same terms as before.

Recent examples would be Picture, First Plus, London & Scottish.

Obviously credit limits on c/card is a different matter entirely, but fixed loans are, as their name implies, fixed.

To the poster about the Welcome loan, I would imagine this is more to do with their current funding issue, which has caused them to virtually stop lending, but I think the OP was more reffering to loans that were already in existance.