Have I been miss sold RBS Loan

anitlom

In August 2007 I consolidated my old RBS loan with a new one. In total I borrowed £6000. When applying for the loan I stipulated that I did not want a loan where the interest was front loaded - as I may repay the loan early. The previous loan I had was a mortgage style loan which had the interest added every three months. I wanted the current loan to be similar but I was assured that although the interest was added on at the beginning that if I repaid it early that I would only have to pay interest up until that point. I was quite clear in saying to the advisor that I did not want a loan that made me pay the majority of the loan up front and she adcised me that I wouldn't be doing this.

I went into another branch nearer to home to sign the agreement - they never gave me a copy and siad they would fax it to my branch. My branch never sent me copy either. I has since Oct 07 asked the branch several times for a copy of the t & c's which relate to my loan but they have never sent them. I have now received a statement which clearly states that the early part of the loan will be allocated to interest payments and then the later part will be to pay the capital. I feel cheated. I have asked the bank for a copy of the original agreement which they have not again provided. I had wanted to repay the loan early as I anticipated I would but I will have to pay nearly all the capital as all I have really pad is the interest. Where do I stand??

marshallka

anitlom wrote: »

In August 2007 I consolidated my old RBS loan with a new one. In total I borrowed £6000. When applying for the loan I stipulated that I did not want a loan where the interest was front loaded - as I may repay the loan early. The previous loan I had was a mortgage style loan which had the interest added every three months. I wanted the current loan to be similar but I was assured that although the interest was added on at the beginning that if I repaid it early that I would only have to pay interest up until that point. I was quite clear in saying to the advisor that I did not want a loan that made me pay the majority of the loan up front and she adcised me that I wouldn't be doing this.

I went into another branch nearer to home to sign the agreement - they never gave me a copy and siad they would fax it to my branch. My branch never sent me copy either. I has since Oct 07 asked the branch several times for a copy of the t & c's which relate to my loan but they have never sent them. I have now received a statement which clearly states that the early part of the loan will be allocated to interest payments and then the later part will be to pay the capital. I feel cheated. I have asked the bank for a copy of the original agreement which they have not again provided. I had wanted to repay the loan early as I anticipated I would but I will have to pay nearly all the capital as all I have really pad is the interest. Where do I stand??

Was this taken out in the bank or over the phone? Could you perhaps prove the conversations that took place and take it from there. You could request a subject access request from them. (IE all the information with regards to the loan and also including telephone conversations too).

anitlom

Hi,

I phoned up my branch and they arranged it over the phone and then asked me to go into a local branch to sign the agreement so that they could pay the money in that day.

I could try a sar.

marshallka

anitlom wrote: »

Hi,

I phoned up my branch and they arranged it over the phone and then asked me to go into a local branch to sign the agreement so that they could pay the money in that day.

I could try a sar.

It may give you the ammunition.

CLAPTON

anitlom wrote: »

In August 2007 I consolidated my old RBS loan with a new one. In total I borrowed £6000. When applying for the loan I stipulated that I did not want a loan where the interest was front loaded - as I may repay the loan early. The previous loan I had was a mortgage style loan which had the interest added every three months. I wanted the current loan to be similar but I was assured that although the interest was added on at the beginning that if I repaid it early that I would only have to pay interest up until that point. I was quite clear in saying to the advisor that I did not want a loan that made me pay the majority of the loan up front and she adcised me that I wouldn't be doing this.

I went into another branch nearer to home to sign the agreement - they never gave me a copy and siad they would fax it to my branch. My branch never sent me copy either. I has since Oct 07 asked the branch several times for a copy of the t & c's which relate to my loan but they have never sent them. I have now received a statement which clearly states that the early part of the loan will be allocated to interest payments and then the later part will be to pay the capital. I feel cheated. I have asked the bank for a copy of the original agreement which they have not again provided. I had wanted to repay the loan early as I anticipated I would but I will have to pay nearly all the capital as all I have really pad is the interest. Where do I stand??

They are simply obeying the law

Under the CCA they must charge interest based on a specific formula.

Basically, you pay more interest in the first month because you owe the full amount
the second month you pay a little less interest because you owe a little less capital

and so on for each month until near the end of the loan you pay mostly capital and very little interest because you only owe a little.

just like all mortgages

its very fair and anyway they have no choice as its the law.

Mark_Davis

CLAPTON wrote: »

They are simply obeying the law

Under the CCA they must charge interest based on a specific formula.

Basically, you pay more interest in the first month because you owe the full amount
the second month you pay a little less interest because you owe a little less capital

and so on for each month until near the end of the loan you pay mostly capital and very little interest because you only owe a little.

just like all mortgages

its very fair and anyway they have no choice as its the law.

Not quite

They are obliged to provide a (signed) copy of the original agreement.

Thereafter there is a cooling off period.

This has yet to be initiated

anotherpaul_2

anitlom wrote: »

I have now received a statement which clearly states that the early part of the loan will be allocated to interest payments and then the later part will be to pay the capital. I feel cheated. I have asked the bank for a copy of the original agreement which they have not again provided. I had wanted to repay the loan early as I anticipated I would but I will have to pay nearly all the capital as all I have really pad is the interest. Where do I stand??

A lot of lenders track the outstanding balance this way - with all the interest over the life of the loan added to the initial balance. However, if you ask them for an early settlement fee, it should be less than the statement balance. You should have to pay the interest to date, possibly plus another two months, but nothing more than that. I would start by asking them for a settlement figure (and a copy of the agreement).

Lenders do also seem to often get the settlement figure wrong too, though. So, double check it.

If you want to post actual figures (opening balance, repayment amount, number payments, interest rate if you know it, etc) we can give you more useful feedback.

PBA

I know at Abbey the interest is always front loaded, but if the loan is paid off early then a rebate is calculated based on the number of days the loan has been outstanding, so in effect you don't pay any more than if the interest had been calculated daily. I had thought this was a legal requirement so I'd imagine RBS would work the interest out the same way.

hedion

best thing you cant do is check the balance of the loan and get a settlement figure.

If they are the same then you have a problem.

I would expect them to be different in which case you will probably have a small settlement fee.

anitlom

Thank you all for the advice - Clapton you refer to them following certain procedure because it is law - where can I find this legislation or act, it would be 'interesting' to read, no pun intended!! I think i will go back to the bank and again request a copy of the agreement which they still have not sent.

CLAPTON

anitlom wrote: »

Thank you all for the advice - Clapton you refer to them following certain procedure because it is law - where can I find this legislation or act, it would be 'interesting' to read, no pun intended!! I think i will go back to the bank and again request a copy of the agreement which they still have not sent.

Just to clarify
I am referring to the method of calculating interest for early settlement and not about the requirement to provide a copy of the credit agreement.

An easy introduction to the settlement issue is here

http://www.fisa.co.uk/downloads/Early%20Settlement%202004%205.pdf