HSBC Managed Loan - PLEASE HELP!!

CLAPTON

bernieman wrote: »

to answer Clapton

I remember this vividly when I had the loan details on the screen... the bank manager chuckled when the computer calculated either 2008 or 2010 for payment completeion because he said... obviously you'll have paid it off by then as you can increase the payments anytime you want. shame there is a no swearing rule on here as I have plenty for that banker;)

I've tried to answer your questions about mis selling and what the rules are.
As I say you may well have a valid complaint about the previous a/c fees/charges and the need for the loan.

However, it's four years ago, the sum of money is modest, the loan details were pretty good..you probably wouldn't have been offered that elsewhere, you have had a long time to save up and clear the matter.

I'ld move on if it were me.

However if you pursue it you have my best wishes for success.

subinagee

Hey Guys,

Managed to dig out my agreement from way back!

Amount of Loan: £3,700
Period (in months): 84
APR: 12.1% Variable
Total Charge for Credit Comprising £1,704.49
Total Interest: £1,704.49
Arrangement fee: £0

Interest rate 7.0% over base rate (=11.5% at the time = effective rate)

(I tend to get a little stressed out about money since i have this, massive student loans, two great big overdrafts from uni and all my bills to pay =almost what i earn in a month + what i owe friends parents and partner whos in uni still)

subinagee

almost forgot - i cant see on my agreement if there is payment protection on this - do i need to ask because i know in the past i either was made to have it on this or another loan that this managed loan consolidated (i was a student and not working) and they made out that I had no choice but to opt-in for PPI or else my application for credit would be unsuccessful

subinagee

scrap the long message with lots of figures - my brain started working!! I get the payments now!! 34 comes off my loan amount (3700) and the other bit comes off the interest which is paid first (hence interest values going down)

I would still love to know about PPI though?

CLAPTON

The way all loans work is like this

The interest is NOT spread evenly throughout the period of the loan, but is charge on a monthly basis depending upon how much you owe


so in your first month you owe the full 3,700
so the interest payable in the first month is
3700 x 12.1%/12 i.e about £ 35 : as you paid about 64 then the capital decreases by 64-35 i.e. £29

so in the second month you 'only' owe 3700-29 i.e 3,671 so you pay a little bit less interest (not much because your repayments are very low.)
i.e. 3671 x 12.1% /12
so over the months the capital owed decreases slowly and so your interest decreases.

That is why e.g. after half the payments are made you still owe much more that half the capital... in fact you would still owe over 2200 (assuming no change in interest rates.


This is the way all loans (including mortgages ) work.


PS ... you seem to have got there before me!

CLAPTON

Based on the figures you have posted I don't see any PPI there.. also I'm not aware of HSBC selling PPI on managed loans.

movingforward2010

i had a HSBC managed loan and paid £101 a month, £57 of this was taken as interest !!

CLAPTON

wxmlad wrote: »

i had a HSBC managed loan and paid £101 a month, £57 of this was taken as interest !!

whether that's a little or a lot depends upon the APR and the period the loan was spread over

Gettingontopofdebts

My managed loan for £20000 - during the most awful awful financial time of my life in 2006 - was set at 1% above base rate interest - and I have increased my monthly DD payments twice in 2 years - now paying £247. The interest last month was £38 - which is great for me personaly at the moment. I always keep a very careful eye on my accounts with Internet Banking. I can now see a light at the end of a very very dark time in my life.