Rule 78

lilylump

NEED ADVICE!!

I've had a secured loan with First plus for 4 years now, plus ppi which I wish I never had, :mad:. I rang for a settlement today and blow me I owe more than I borrowed still. After reading the forums here, and gaining some understanding, I asked what interest was being charged etc. They calculate under rule 78, thought that only applied to loans under 25k or am I wrong?? and I thought that as of April 2008 all secure loans in uk could only be charged a max 1 months interes ton early repayments. They said that it was because I applied formy loan in the Jan 05 and the new ruling came out in the May 05. I just want to pay the loan off, is there any legal advice out there as I know I'm not on my own with this problem and with the sam e company. Also they as now called 'uk secure lending'.

Can someone please advise me or point me in the right direction, my payments have risen to £378.00 p/mth at 9.5%, I pay more now than I ever have done.

HELP:eek:

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di3004

lilylump wrote: »

NEED ADVICE!!

I've had a secured loan with First plus for 4 years now, plus ppi which I wish I never had, :mad:. I rang for a settlement today and blow me I owe more than I borrowed still. After reading the forums here, and gaining some understanding, I asked what interest was being charged etc. They calculate under rule 78, thought that only applied to loans under 25k or am I wrong?? and I thought that as of April 2008 all secure loans in uk could only be charged a max 1 months interes ton early repayments. They said that it was because I applied formy loan in the Jan 05 and the new ruling came out in the May 05. I just want to pay the loan off, is there any legal advice out there as I know I'm not on my own with this problem and with the sam e company. Also they as now called 'uk secure lending'.

Can someone please advise me or point me in the right direction, my payments have risen to £378.00 p/mth at 9.5%, I pay more now than I ever have done.

HELP:eek:

Hiya hun

Golly there are so many in this situation regarding FP, and where the rule of 78 comes into it.

Our Marshallka was in the same situation as you and helps out on the PPI reclaiming -discussion thread, just click on loans first then you will see that mentioned thread on top of the page.;)

Please come along and post on that thread hun, you will be surprised with how many have complaints about these and will be able to help you through this.;)

Hope to see you there hun.

Di
X

marshallka

lilylump wrote: »

NEED ADVICE!!

I've had a secured loan with First plus for 4 years now, plus ppi which I wish I never had, :mad:. I rang for a settlement today and blow me I owe more than I borrowed still. After reading the forums here, and gaining some understanding, I asked what interest was being charged etc. They calculate under rule 78, thought that only applied to loans under 25k or am I wrong?? and I thought that as of April 2008 all secure loans in uk could only be charged a max 1 months interes ton early repayments. They said that it was because I applied formy loan in the Jan 05 and the new ruling came out in the May 05. I just want to pay the loan off, is there any legal advice out there as I know I'm not on my own with this problem and with the sam e company. Also they as now called 'uk secure lending'.

Can someone please advise me or point me in the right direction, my payments have risen to £378.00 p/mth at 9.5%, I pay more now than I ever have done.

HELP:eek:

If this was a regulated agreement then you can still have the rule of 78 used on your settlement.

If its an unregulated (ie over 25K) then they should not have used the rule of 78.

Was yours a regulated agreement?

If it was unegulated then you could have an argument

Early redemption
57 The July guidelines made clear the Office’s view that use of the Rule of 78 in the nonstatus
lending market can be unfair and oppressive as it tends to produce a settlement
figure which is excessive relative to the amount borrowed and repayments made and
19
relative to the costs incurred by the lender. Lenders should discontinue its use at the
earliest opportunity, and should not apply it rigidly to existing loan agreements
without some form of cap to ensure that payments on early redemption are not
excessive.
58 The above conclusions apply solely in relation to unregulated non-status loans, as the
position for regulated loans is governed by the Rebate Regulations made under section
95 of the Consumer Credit Act. The Director General has written recently to DTI
Ministers, urging a review of those Regulations. Consideration should be given in any
such review to the Office’s recommendations in its report on Consumer Credit
Deregulation in June 1994, and to subsequent comments on that report. Further
announcements may be made in due course regarding the wider use of the Rule of 78
in all types of credit agreement.
59 Use of the Rule of 78 in unregulated loans is liable to challenge under the Unfair
Terms in Consumer Contracts Regulations (from 1 July 1995). As indicated above,
Schedule 3 to those Regulations includes, as an example of terms which may be
regarded as unfair, terms which have “the object or effect of ... requiring any
consumer who fails to fulfil his obligation to pay a disproportionately high sum in
compensation”. In the Office’s view, the application of the Rule of 78 in mortgage
transactions can result in a rebate to the borrower which is disproportionately low, and
so the borrower may end up paying a disproportionately high sum to redeem the
mortgage. A term to which the Regulations apply shall not be binding on the
consumer if it is unfair.
60 In addition, Regulation 6 of the Unfair Terms in Consumer Contracts Regulations
provides that a written term of a contract must be expressed in plain, intelligible
language. The Office has not encountered any contract term which describes the
operation of the Rule of 78 in a way which is likely to enable the consumer to
understand it and appreciate its significance.
61 Lenders should cease using the Rule of 78 in relation to unregulated secured loans to
non-status borrowers. They should move to alternative methods of calculating the
settlement figure such as the actual reducing balance or actuarial methods. Any
charges for early redemption should be reasonable, and should do no more than cover
the lender’s administrative costs together with any other costs reasonably incurred to
date and not already recovered. It may be appropriate for such charges to be
expressed by reference to a sliding scale of charges which closely approximates to
these costs. Lenders should not seek to use the imposition of charges on the early
redemption of a loan as a means of recovering costs which were not reasonably
incurred in relation to that loan, or which were clearly excessive and disproportionate

to the circumstances of the loan.


http://www.oft.gov.uk/shared_oft/reports/consumer_credit/oft192v2.pdf

lilylump

Thanks for replying, my loan total was £41000 which included the ppi, how do I know or how would I find out if my agreement is regulated or unregulated??

di3004

lilylump wrote: »

Thanks for replying, my loan total was £41000 which included the ppi, how do I know or how would I find out if my agreement is regulated or unregulated??

Hi there

If over £25K the loan was NOT regulated, otherwise yes, Marshallka will more than likely come back to post to help you through this matter at some point today.;)

marshallka

lilylump wrote: »

Thanks for replying, my loan total was £41000 which included the ppi, how do I know or how would I find out if my agreement is regulated or unregulated??

Yeah, that is the link above which says about using the rule of 78 on unregulated agreements... if you have a read through it there is your argument.

lilylump

So I've got a argument with first plus then, who do I take this to now, as I'm not letting it go until I get a fair deal. It's so annoying that when you apply for things like this and I for one will never ever do it again!! I've read the terms and conditions of the loan over an over again, every single piece of paper they sent me not one mention of this rule 78!!! If it explained in black and white that they worked your loan out with this rule and gave you some idea what you had to pay back , no one would be so stupid to go ahead and sign for the loan in the first place. They're con merchants!!

Sorry for ranting on, I'm so annoyed and upset by the whole thing :mad:

Please if at all possible point me in the right direction, and many thanks for you help.

marshallka

lilylump wrote: »

So I've got a argument with first plus then, who do I take this to now, as I'm not letting it go until I get a fair deal. It's so annoying that when you apply for things like this and I for one will never ever do it again!! I've read the terms and conditions of the loan over an over again, every single piece of paper they sent me not one mention of this rule 78!!! If it explained in black and white that they worked your loan out with this rule and gave you some idea what you had to pay back , no one would be so stupid to go ahead and sign for the loan in the first place. They're con merchants!!

Sorry for ranting on, I'm so annoyed and upset by the whole thing :mad:

Please if at all possible point me in the right direction, and many thanks for you help.

Right, firstplus have used this in your unregulated agreement and that is worth a complaint to the OFT firstly and is challengable....

FIrstly was it actually Firstplus that SOLD the PPI and loan to you or did you use a broker....?

As regards the PPI was it missold to you as this was not explained the full cost of the PPI ?? This PPI was infact another loan on top of your orginal loan and also had interest on it for the full term of the loan but most probably only covered 5 years. If you did not realise the FULL cost of the PPI and this was not explained to you then you have a complaint. The rule of 78 is used against the loan and the loan that paid the PPI too....

Just take a look at the link here and see what you can add and delete from the template letter. Its always best to do your own from this. There are lots of reason on there for the misselling so pick out the ones that are applicable to yours.

You then write to the firm that actually made the sale of the PPI to you if this is different from the lender and don't forget to send this recorded delivery so you always a proof and dates etc.

After that you have to give them 8 weeks for a full and final response. In this time it is usual to get a response of "sorry we sold this to you fairly" but you then respond to this and reiterate your complaint again. The next time they write they either give you a final response which you would need in order to take this complaint to the FOS or offer to settle.

http://www.moneysavingexpert.com/rec...urance#reclaim


Good luck