Alliance & Leicester Early payment Nightmare

hezzie

Hi all,

I've been approved for a £6000 loan at £5.5% with A&L

I nearly took out PPI with them but fortunately came here first----Phew glad I did.

They were going to charge me just under £1400 over 5 years, I used the links on M.S.E to get a quote from another company, which quoted under £400 that's a swift £1000 saving....cheers Mr Lewis! :kisses:

So I called them and asked them to take it off which they have.

This is the bit where I need some help please - on their website they say early payment is 1 months interest, if you ring the staff at A&L they all tell you to repay early costs you just 1 months interest, seems fair, but then on the paperwork I get something completely different, so I rang to get clarification, the girl said "oh I've had a few calls like this, it's wrong and I'll get it amended and resend it to you, it's amended all right, upwards!

I presume this is because I don't want their PPI, anyway, this is what the pre contract information states....it's definately NOT 1 months interest.....

OTHER FINANCIAL INFORMATION
Total Charge for Credit is £860.40 charged at the rate of interest of 5.5% per annum.
The interest on a personal loan is calculated on the basis that you will be paying off part of the loan (capital) each month, over your chosen term. This results in a larger amount of interest being attributable in the early months of the agreement than in the later months.

KEY INFORMATION
The following costs and charges will be incurred in the event that you request any of the additional services mentioned
(to cover administration costs) or fail to make any payments due or break any terms of the agreement.
Cancellation of Loan Protection Insurance (after 30 days of taking out the loan) = £10
Arrears letter charge = £25 Unpaid Direct Debit charge = £25

If you settle your loan early, the settlement amount that you would have to pay per £1000 borrowed would be as follows, for example, if you wanted to settle when a quarter of the repayment period had passed the settlement amount per £1000 borrowed would be £778.17; if half of the repayment period had passed the settlement amount per £1000 borrowed would be £536.06; and if three quarters of the period had passed the settlement amount per £1000 borrowed would be £277.07.


Please note: The early settlement examples shown above are for illustrative purposes only and are based on your total borrowing i.e. the "Total amount of credit" as detailed in "Key Financial Information" section, but shown per £1000 borrowed. The figures and amounts shown will vary depending on settlement date, term of loan taken, size of loan, APR of your loan, number of months remaining on your loan, payment frequency and date. Once you have commenced making your monthly repayments and you wish to settle your loan early please contact Alliance & Leicester Personal Finance for a more detailed and up to date settlement figure.

Rebates of unearned interest are calculated under a mathematical formula set out in the Consumer Credit (Early Settlement) Regulations 2004, which limits the amount of interest that a creditor can claim.

Under the Regulations the settlement date used to calculate the rebates is allowed to be deferred by 1 month (for this purpose we treat 30 days as 1 month) to claim a charge for settling the loan early. Please note that the 1 month deferment of the settlement date will not be applied if your loan term is 12 months or lower. Further information on early settlement will be provided on request.


Surely if I sign this then there's NO WAY I'm going to be charged just 1 months interest if I repay early is there? £778.17 x 6 = £4669.02

Comments/suggestions anyone?

Thanks,

Wayne.

hezzie

Hmmm obviously more complicated than I thought judging by the silence, I've decided to go ahead with it as it's only just over £800 in interest over the 5 years.

Catch you later,

Wayne.

dazza.mk

go via https://www.quidco.com and you could get £75 cashback!!!!

loubie_lou

":spam: up" anyone?

Reported

DavidHM

The figures quoted aren't settlement charges, they're settlement figures, i.e., they include the charges plus the outstanding principal.

So after 1/4 of the repayment period had passed you'd settle ~£750 of principal plus £28.17 of interest due to the fact that the monthly payment stays the same, yet you are paying more interest and less principal in the early months of the loan than in the later months, because you're paying that interest on a larger outstanding balance earlier on.

There's nothing mysterious about this and you certainly wouldn't be charged ~£10,500 or whatever for settling the loan early.

Incidentally, unless you can get a subsidised supplier loan (e.g., for a car) or interest free balance transfer, I doubt you can get cheaper money than 5.5% APR anywhere.