Repaying loan early to Welcome Finance

craigroberts

Hi there,

I would be really grateful if someone could give me a bit of advice on repaying my Welcome Finance secured loan back early?

I took out a loan in December 2008 and now I just want to get rid of it. It is causing problems because it is a second charge on my home and well I was undergoing some personal problems at the end of 2008 and took this out without thinking properly. Also it would serve for me to get rid of it, because I want to transfer my mortgage to a better rate and having the second charge, requires a deed of postponement and all sorts of hassles.

So I have asked for an early settlement figure from them. They say I should receive this within the next 5 working days.

Now I was wondering if anyone had any experience with this? I have looked at the early repayment figures for quarter term, half term, three quarters of the term (15 years is my term - like I said i've been a numpty!) and they seem pretty steep. However, my question is - does anyone know what the situation is if you pay it back within the first year?

I read Martin's article on this and he states:

"Redemption penalties: These are fines if you try and pay off the loan early. This used to be a major problem as these penalties are stringent, and for many with existing secured loans sadly they're still in force.

• Yet for new loans of less than £25k, redemption penalties are legally restricted to only two months' worth of interest. Larger amounts have no maximum limit however, and penalties can be much heftier. Many loans have settlement figures of up to 6 months interest for the first few years, then on a sliding scale after this.
• Rule of 78: For loans of under £25,000 a potential hidden penalty used to come from ‘rule of 78' interest calculations, a complicated formula which artificially allocates repayments towards interest not capital, leaving more left to repay than you think. Repay very soon after borrowing and it can mean paying back more than you borrowed. Find out more: Rule of 78.
  Thankfully people taking out loans these days don't have to worry as the government has banned rule of 78 charges, however most people with loans taken out before that will be caught by this."

Am just trying to think will I end up paying something ridiculous on the £13,500 taken out or will it be in accordance with what Martin says above?

Sorry for the silly questions - just am worried about this now and want to be armed with as much knowledge as possible before I get their settlement figure.

Tonnes of thanks for anyone who can shed light on this or has past experience of such a predicament.

Cheers!

CLAPTON

why not post up some facts?

how much did you borrow
over what period
APR
fees?
monthly repayment

what are the settlement figures for 1/4, 1/2, 3/4 ?

craigroberts

Sorry - should have done that earlier but felt stupid.

Borrowed £13,500 over 15 years at 25.34% APR (yes I know) - monthly repayment of £291.33

The acceptance fee and broker fee was a total of £1315.

The form says:

"If you exercise your right to settle this agreement early you may expect to pay, if you settle:

After 1/4 - £13,252.16
After 1/2 - £11,909.25
After 3/4 0 £8,476.64"

Hope you can help with that info in my mind.

Thanks again

C

SL123

So I have asked for an early settlement figure from them. They say I should receive this within the next 5 working days.

I also requested an early settlement figure and was told 5 working days, this was 2 and a half weeks ago. I tried ringing them to find out where it was but had to listen to an answer phone message saying that they were unable to access customers information and to call back. Anyone else had this trouble?

craigroberts

SL

Can I ask do you have any inkling of what the procedure might be or are you also, like me, waiting for the figure to find out more? TIA

ps...I also asked them if there was any way of readjusted my payment term length and woman on the phone said that I had to talk to my account manager - who had left at noon. Funny because it was 11.55am when I spoke to her!

Sol00

Welcome's systems were down on Wed or Thurs SL, but they're back up now.

Craig when was your agreement written up?

craigroberts

Hi Sol00

It was written up on 12th December 2008.

TIA

Sol00

Thanks. I'm not aware of their procedure for giving early settlement figures, so I would take their word for it at the moment . If they haven't replied within the five working days let us know and we'll go from there.

P.S. As far as I'm aware, they can only add two months interest on top, so it should be, at the most, your outstanding balance plus 2 months interest.

CLAPTON

They are allowed to add 2 months interest to the balance ..which would be about £570 maybe plus the fees etc...(i'm not sure how they deal with those ). You are only paying £ 10 per month off the capital.

Anyway best to wait for the settlement figure.

How are you planning to pay the debt off ..what happened to the loan money?

PS... why would you want to adjust the term length... the APR of this loan is absolutely awful, you must try and get rid of it completely.( as it stands now your 13,500 will cost you over 52,000 if you pay over 15years).

craigroberts

Thanks Sol! I'll let you know if I get no word from them in 5 working days. That is a relief about the 2 months interest - I can deal with that. I guess will have to deal with the fees too?

Clapton thanks for your helpful advice too. appreciate it. The loan money has not been used yet - it is sitting in a savings account. It was intended for something but yep, the APR is ridiculous and the hassles it will cause me - is not worth keeping it. Put it down to a month of stupidity when getting this loan...but have learnt my lesson.

I was only trying to adjust the term to see what my monthly repayments would be if say it was reduced to 5 years...but yep, my main goal now is to get the settlement figure and send them their money back plus whatever on top. I was more worried that they would lob on months of interest but 2 months is fair and fine by me. Guess the fees will come out of my pocket too but that serves me right for being a numpty.

SL123

craigroberts wrote: »

SL

Can I ask do you have any inkling of what the procedure might be or are you also, like me, waiting for the figure to find out more? TIA

ps...I also asked them if there was any way of readjusted my payment term length and woman on the phone said that I had to talk to my account manager - who had left at noon. Funny because it was 11.55am when I spoke to her!

Craig, No I have no idea, I am just waiting to see my settlement figure. I just rang them and got through this time, I was told that it may have been lost in the post and that they will re send it. Lets see. Good luck getting yours!