Halifax Loan - Early settlement figure seems high

azh297

Hello everyone

This is my first posting on the site and if I'm asking something that's already answered I apologise but I'm so confused!!

I took out a loan with the Halifax in January this year for £14000. Naievely, I also took out PPI for accident, illness and death so that if anything happened to me my parents would not be chased for the money.

The loan details break down as
Cash loan............................£14000.00
Insurance Loan ...................£2434.01

Interest on the cash ...........£6253.24
Interest on the insurance.....£1086.43

Total amount loan plus insurance = £23,773.68

Interest rate 11.15%

Duration of agreement = 86 months (including a two month payment break)

My situation has changed and I am able to repay the loan but when I asked for the settlement figure I was told it is £14,788.13 and I don't understand how they reach this figure??

The loan completed on January 26th and I can't understand where they get this figure from or how they have calculated it. When I speak to the call centre staff they are very polite but ultimately clueless about how the figure is calculated....Instead of answering my questions they just tell me the figure is in line with the CCA 1974.

I don't have a problem with paying for borrowing the money - but I just don't understand how the figure is reached and my mother who is an avid fan of Martin and the site is insisting I'm being ripped off.

Sorry for being so long winded but if anyone can help make this a bit clearer for me I (and my mum) would really appreciate it.

Thanks in advance
:eek:

~Beanie~

Have you made any payments off the loan yet and if so, how much?

Rafter

I can get fairly close to your numbers although Halifax should be able to provide you with a breakdown of the figure.

Because you have made no payments so far, the interest on your loan has been added to the balance.

Because you are settling the loan early there will also be a penalty (usually one months interest payment).

Because you have had the loan for 3 months, you have had to pay 3 months insurance premium and the premium isn't constant over the life of the loan (because you owe more at the beginning than you do towards the end).

So, I think your loan balance with interest at the end of march was £14,292.

One months interest penalty will be about £150.

They have probably assumed you will pay off the loan at the end of April, so will owe your payment for april too, which will add another £150

And the insurance through to the end of April will cost about £186 out of your total premium of £2434.

So grand total very close to their numbers.

Nearly £800 for borrowing for 3 months seems like a lot, but given you have made no payments, had insurance and have a penalty to pay, it looks about right.

R.

Robert_Sterling_3

I was surprised that it was not more.

azh297

Lesson learned.... It may have been an expensive one but they'll only get me once!! Thanks to all of you - I really appreciate your help

Rafter

No problem,

Count yourself lucky that the rules have been tightened up recently.

If this had been one of those nasty secured type loans from about 3 years ago, you could be facing a payment of several thousand pounds above what you borrowed.

R.

melorablack

Plus, as you have PPI on your loan you will not get a proportionate refund of the single premium if you repay the loan early. That is another thing that will be added to your settlement figure.

sammyjammy

And by the way if something happens to you your debts do not become the responsibility of your parents.

Robert_Sterling_3

No. You cannot get a loan until you are an adult. At that age you are responsible for yourself.