HSBC Managed Loan, 0% APR

303

After recently writing to HSBC with an offer of pro-rata payments for our debts, which amount to £21k across a personal loan, 2 credit cards and an overdraft, I was amazed to receive a letter this morning offering us a Managed Loan to cover all our debts, with an APR of 0%. I've done lots of searching online for information about HSBC Managed Loans, and everything I've read was bad, but it all seems to be based on people being given managed loans with excessively high interest rates. Has anyone else been offered a loan with 0% interest, and is there any reason I should be wary?

DevonGirl

Hi 303

Having had my own run-ins with HSBC, I was interested to read your thread. Have you thoroughly read the terms and conditions of this loan - does it say anywhere that if you were to miss a payment or in some way infringe their rules you would automatically be put up to their standard loan rate? Is there any breakdown of the final figure? Presumably at 0% this would be the same as the amount you owe them? Is the payment the same as the one that you quoted for your pro-rata payment? As you're offering pro-rata payments yourself does this mean you're not in a DMP (debt management plan)? In what way would they be 'managing' the loan, other than putting your debts all together?

Possibly you've already considered the above, so I'm not doubting you but I'm so sceptical about HSBC I find it hard to believe!

RAS

Hi

They will probably roll in the charges and interest into the managed loan when it is set up. If these are old accounts you may have a number of legal options that will be removed if you go for a managed loan.

You need to get someone independent to read the terms and conditions and look at the whole package before you agree to this.

based on what i have read here, I would be inclined to say no.

303

DevonGirl wrote: »

Hi 303

Having had my own run-ins with HSBC, I was interested to read your thread. Have you thoroughly read the terms and conditions of this loan - does it say anywhere that if you were to miss a payment or in some way infringe their rules you would automatically be put up to their standard loan rate? Is there any breakdown of the final figure? Presumably at 0% this would be the same as the amount you owe them? Is the payment the same as the one that you quoted for your pro-rata payment? As you're offering pro-rata payments yourself does this mean you're not in a DMP (debt management plan)? In what way would they be 'managing' the loan, other than putting your debts all together?

Possibly you've already considered the above, so I'm not doubting you but I'm so sceptical about HSBC I find it hard to believe!

Here's a paragraph from the letter:

We understand that at present you are unable to meet the monthly repayment of £amount1 as quoted in the loan agreement. As a concession to you and without varying any terms of the loan agreement, HSBC bank would be prepared to accept reduced monthly payments of £amount2 until further notice. These reduced payments represent the capital element of your contractual payments and no interest.

The reduced monthly payment mentioned is the same as the figure I gave as a pro-rata offer, and these (supposedly interest-free) payments, over the duration of the loan (10 years), adds up to the full amount of the loan offered. Then, on the Fixed-Sum Loan Agreement form, the APR is quoted as follows:

Interest Rate: 0.00% over our base rate, which, at the date of this agreement gives a variable annum rate of 0.00%.

@RAS "They will probably roll in the charges and interest into the managed loan when it is set up" - can they do this? Surely any charges and interest should be stated on the agreement that we have to sign and send back to them?

All in all, this does seem a bit too good to be true, as it actually seems like HSBC are trying to help us out! Which is why I'm so skeptical about it...

waterwatcher

The rate appears to be variable and althoug it is now 0% as their base rate is so low should this rise then there will be interest incurred....I think? I maybe corrected by someone more knowledgeable.

insideinfo

HSBC do offer genuine schemes at 0%. They don't happen that often but I have seen it before. As long as the value of the loan matches your current HSBC debts, it's a good option, better than going down the collection/debt management route. RAS is quite right, the devil (if any) is in the detail.

303

insideinfo wrote: »

HSBC do offer genuine schemes at 0%. They don't happen that often but I have seen it before. As long as the value of the loan matches your current HSBC debts, it's a good option, better than going down the collection/debt management route. RAS is quite right, the devil (if any) is in the detail.

Well that's encouraging to know - when the letter came through the door it seemed a bit too good to be true. Don't know if the APR on managed loans is judged on each individual case, but the letter I'd sent to them was based on the template I got from the CCCS website (and I mentioned the fact I'd been in touch with the CCCS), and included a full breakdown of our income and outgoings, and why we're now in financial difficulties. Maybe that all helped?

I've read HSBC's letter, and the loan agreement, over and over, and the only part that concerns me is where it says they "reserve the right to review the concession" - the lower payments based on 0% interest - "at any time and to vary it or revert to the strict terms of your loan agreement". But given that the terms laid out in the loan agreement don't mention any interest rate other than 0%, maybe I'm worrying unnecessarily? And realistically, even a loan at 10% above base rate wouldn't be that much worse than the APR we'd be looking at on a standard loan, given the state my credit record's in.

Think I'll give the CCCS a call tomorrow, and run it by them and see what they think.

insideinfo

They have offered managed loans with rates like 22% etc - they are having to change their attitude as so many people get so much further into debt that they can't manage. The HSBC Managed Loan has a terrible reputation but ike I said I have seen a few offered at 0%.

Buffythedebtslayer

I wouldnt trust them not one little bit.

"reserve the right to review the concession" - the lower payments based on 0% interest - "at any time and to vary it or revert to the strict terms of your loan agreement".

That can surely only mean they can put the interest up and the phrase strict terms of your loan agreement - could that mean the first set of terms?

Do ring CCCS they will know

good luck xx

LilacPixie

I would not trust them one bit. I have heard storys of the 0% APR managed loan and they have not been good. What they have been doing is taking your existing loan agreement plus all amounts of interest you would be paying if you paid each payment faithfully to the end then rolling it into a 0% managed loan while reserving the right to then go and charge interest on interest in the future.

Personally I would avoid like the plauge.

303

LilacPixie wrote: »

...rolling it into a 0% managed loan while reserving the right to then go and charge interest on interest in the future.

...but has anyone actually had interest applied to 0% Managed Loans? Given that my Loan Agreement states the interest rate as 0% above base rate, presumably the only interest that could be applied is at base rate?