HSBC Managed Loan - PLEASE HELP!!

Annabellina

Hi all,

I really, really hope someone out there can help me as I do not know where to turn now and can't believe that HSBC can get away with this.

Just over 3 years ago I was in a financial nightmare after a messy split with my partner a few years previous to that who had left our son and I in a huge amount of debt.

I went to the Credit Councilling Service for help and they were great. With their assitance I was able to set up manageable repayment plans with all my creditors, all except HSBC. They were the ONLY one who offered me NO help whatsoever. This was despite me sitting in tears in the bank, the CCS sending numerous letters to them on my behalf and also my own personal letters asking for a little leeway. I had a personal loan, overdraft and credit card with them, all of which I could not afford the monthly payments for (despite working full time). They point blank refused to offer an assistance, but instead hounded me with phonecalls every day and letters threating bailiffs and court. I was in a really bad way, it stressed me out so much that I very almost suffered a nervous breakdown.

They then offered me a 'Managed Loan' which I nievely thought was their attempt to help me. The total consolidated amount of the above was £10,880. It was over a huge 12 years, but at monthly repayments of £103.00, which I could just stretch to. The interest rate was 5.6% which I, again nievely, thought was fair. So...I signed on the dotted line and breathed a huge sigh of relief thinking I was on the road to being debt-free.

3 years on, a quarter of the loan now elapsed and saying in the contract the settlement figure would be £8000 after this period. With all of my other debts almost all paid, I felt I could afford to pay a bit more a month and so took the day off work yesterday and went to a HSBC branch to discuss whether I could get a personal loan or one over a shorter period, with intention to clear it quicker.

Well, I basically spent the next 4 hours in tears as I learnt that the interest rate I was quoted was actually variable and the actual balance/settlement figure for my loan now (on £10,880 with 3 years payments of £103 per month) was now: £11,113.00!!!!!!!!!!!!!!!!!!!!!! MORE THAN I BORROWED ALL THAT TIME AGO. How can they do this?? I have basically just given them over £3000, to be even more in debt.

Can someone please tell me any options now. There's no way I can afford the repayments on a personal loan at this figure. I can probably afford about £160 per month, that's if I can get one at all.

I feel absolutely trapped and depresed about this, can someone please give any support or advice on this please.

Thanks very much, Anna. x

Enfieldian

Do you have online banking or do you still get statements?

I receive a statement every year, maybe more often from HSBC showing the amount left to repay on mine.

In adddition to this, when I log on to check my current account balance I can see the managed loan balance at the same time. It shows each payment made, monthly interest when it is added and the total left to repay.

Your situation sounds very odd.... I am expecting to finish paying off the £10K loan I had about 6 years ago, later this year, as planned.....

ILW

Seems the figure add up like this.
Original loan £103 x 12 x 12 = £14832
Paid so far £103 x 36 = £3708
Balance £11124
Seems about right.

The amount of interest seems very low considering the length of the loan (around 3%)

grey_lady

Wow, that really sounds like something isnt right, if the interest rate on your flexible loan really was 5.5% 3 years ago, then it sounds like it was 0.75% over the baserate as the lowest baserate 3 years ago was 4.75%. Do you still have a copy of the original loan agreement?

The highest the baserate has been in the last 3 years is 5.75%, (plus whatever they charged on top, so if it was 0.75% then your loan should have only gone up to 6.5%) but you'd have to have an APR of about 13% to still have 11,100 outstanding.

I've just done a little digging and it appears that hsbc managed loans are base rate plus 10% - are you sure it wasnt 5.5% base rate plus 10% on top when you got this loan? hidden away in the t&c's maybe.

Really a good idea to dig out a copy of the original agreement, if you no longer have a copy, then you can write to them requesting a copy.

Also find out what the current interest rate being applied to the loan is, and if it's over 10% ask them for an immediate review at a higher level than your local branch, e.g complain to head office.

Sounds like a lot of the original loan could have come from late payment / bank charges? if that's right then depending on how the bank charges test case goes you might be able to get them knocked off the 11,100 along with some interest.

hth

grey_lady

ps - sorry ILW i dont think your're factoring in the interest correctly, the initial loan wasnt for 14832 it was for 10880, a 12 year loan with monthly payments of £103 at an interest of 5.5% after 3 years would have an ourstanding balance of £8,683.23.

ILW

I agree you are right there, but it appears they have taken the whole loan (fixed term) into account without any early repayment discount. I am more than happy to be corrected on this.

Annabellina

Thanks for your replies.

I have the original agreement here:

Amount of Loan: £10,880.00
Period of loan (months): 144
Annual percentage rate: 5.6% Variable

Interest Rate: 1.0% over our base rate, which at the date of this agreement gives a variable per annum rate of 5.65%

Total Charge for Credit: £4,007.51

I have never missed a payment or incurred any charges. When I looked at the balance, just a few months after starting it, I immediately questioned it and rung them. My payments are £103 and I think even the first interest amounts were more than this (£111 ish, sometimes as high as £118). When I called them the woman they put me through to (abroad somewhere) told me not to worry as it looks worse as the interest is applied daily, posted monthly, she lead me to believe that it would not affect the actual amount I owe and I would only pay what I borrowed.

Is that really not the case then??! If the balance is £11,113.00 a couple of days ago, what on earth could it be in 12 years.

Due to the Bank of England Rate coming down my last 2 interest charges were around £80 (the lowest for the whole period).

I really am so confused and so angry that they even offered this to someone in the debt situation I was, doing everything I possibly could to get out of the hole I was (am!) in, being a single mother and working full time.

I really don't know what I can do now? Any ideas??

Anna

Annabellina

Sorry, just to add, it also says:

EARLY SETTLEMENT
If you wanted to settle your loan early then the amount you would have to pay would be:

If a quarter of the loan has elapsed: £8,777.56
If one half : £6,300.53
3/4s: £3,385.03

It then says in calculating the above amounts, no account has been taken of any variation which might occur under the agreement.....

I never for a second thought that the variation could affect me so badly or would they let it!! How gullable and stupid was I?

Ann

grey_lady

It seems that hsbc managed loans arent worked out the way i thought,
there are lots of posts around that suggest they are toploaded like a mortgage, e.g you pay off the interest first. But a line in a Times online column say's a hsbc managed loan charges interest at 1 per cent above the Bank of England base rate, payable at the end of the term
I dont really understand what that means, anyone care to shed some light?

'My payments are £103 and I think even the first interest amounts were more than this £111 ish, sometimes as high as £118'

I would have still thought that the initial interest would have been around £50 a month, just dont see how it was £111 on a 5.65% annual interest rate.

Do you have monthly or annual statements detailing how much of your payment every month goes towards interest and how much comes off the balance? and does it say anywhere on the statements what the current rate of interest being charged is? if you dont have them then it would be a good idea to get hold of them and check that you have been charged the correct rate. Compare what rate you've been charged with what hsbc's standard rate over the past 3 years has been. If there's a descrepancy then complain and get it corrected.

Assuming that you cant get a loan elsewhere and you have you to pay this off, ask them to forecast how long it would take you to pay it off at £160 a month, increase your payments when you can, especially if the boe interest rate increases.

If you are paying them for PPI then consider cancelling it.

hth

CLAPTON

I think you ought to write and ask for a full statement of the account showing the month by month interest charged and how the interest rate is determined.

subinagee

I too have a Managed Loan with HSBC that Im not sure I understand...

I took it before university after a bad year out (working and renting accomodation) and couldn't afford the payments once I got to uni. so they consolidated lots of stuff and stretched it over 8 years at £64.34 per month. (total payable £6,176ish?) and the balance was around £4000 i think 2-3 years ago (currently at - £2,457.23)

My query is with the amount of interest. Up until the last couple of months, of the £64.34 i paid in a month, approximately £30 was taken out of the account as interest (46% of my monthly payments). The last couple of months have seen the amount going off the balance dropping as per figures below to about 30% of my monthly payment. Is this a bad interest rate?

(Copied and pasted from online banking)
21/01/2009 PAID IN 64.34 26/12/2008 DEBIT INTEREST TO 25DEC2008 -19.48 22/12/2008 PAID IN 64.34 26/11/2008 DEBIT INTEREST TO 25NOV2008 -23.24 21/11/2008 PAID IN 64.34 26/10/2008 DEBIT INTEREST TO 25OCT2008 -25.35 21/10/2008 PAID IN 64.34 26/09/2008 DEBIT INTEREST TO 25SEP2008 -27.27 22/09/2008 PAID IN 64.34 26/08/2008 DEBIT INTEREST TO 25AUG2008 -27.62 21/08/2008 PAID IN 64.34 26/07/2008 DEBIT INTEREST TO 25JUL2008 -27.09 21/07/2008 PAID IN 64.34 26/06/2008 INTEREST TO 25JUN2008 -28.41 23/06/2008 PAID IN 64.34 26/05/2008 INTEREST TO 25MAY2008 -27.81 21/05/2008 PAID IN 64.34 26/04/2008 INTEREST TO 25APR2008 -29.39 21/04/2008 PAID IN 64.34 26/03/2008 INTEREST TO 25MAR2008 -28.21 25/03/2008 PAID IN 64.34 26/02/2008 INTEREST TO 25FEB2008 -30.67 21/02/2008 PAID IN 64.34 26/01/2008 INTEREST TO 25JAN2008 -31.4 21/01/2008 PAID IN 64.34
(why does i change from 'Interest' to 'debit interest'?)


Can anybody help explain, as I get lost when they start explaining about base rates + 2,5 or 7% and daily charges, over payments and settlements. I forgot really until today when they called because i transferred my payment the morning after the day that the standing order was due.


It seems as though a lot of people are worried about these Managed Loans:eek: