How can this be fair

consh

Hello, hopefully somebody can give me some advice here as i am very angry.
My partner and myself took out a £10,000 business loan in Aug/Sept 2008 as we needed a cash injection fast. We were aware at the time that we were signing up for a loan with a 20% interest rate. Over the 5 years we would end up paying literally double the original loan amount back. A couple of weeks ago the same bank called us to say they were unhappy about us being at or around our ourdraft limit continually and we needed a cash injection. The guy i spoke to proposed we take out a £15,000 loan to pay off the existing loan and free up some cash. Once again the rate was about the 20% mark. When i told him i wasn't interested he intimated that if we didn't the bank would withdraw our overdraft which would have ruined us. As we were so unhappy with them now we decided to go to another high street bank and open an account with them. We managed to get a loan for £17,000 at a rate of 6.4% which means the monthly payments were much less than the loan for £10,000. I then proceeded to contact our old bank and ask for a settlement figure on our high interst loan to which they came back with £11,900. To date I have paid back to them approx £2000 so this will mean that over a 6 month approx period they will be charging us £4000 interest once we've settled. surely this cannot be right. Can anybody help please.
Sorry for dragging on a bit but i wanted to give all the facts.
Thanks
Consh

CLAPTON

when you say a business loan do you mean a personal loan ?

a loan of 10,000 at 20% over 5 years would require total payments of 15,300 ish and not double... can you check your figures?

what are the monthly repayment figures?

did you take out any insurance PPI?

were there any fees associated with the loan?

was there any payment holiday at the beginning of the loan?

were there any missed payments?

what do the T&Cs of the loan say about early repayment?

consh

It is a business loan but as we're not a limited company we are personally liable for it. We have to make 60 payments of about £341. There is insurance on the loan. We felt a bit miffed about having to take it out though. We haven't taken any payment holidays and haven't missed any payments. I have recently moved house and haven't managed to find my copy of the loan agreement yet but have asked them to send out a copy of it. I can't remember paying an agreement fee but will check when the papers come through.

Dabooka

It's not as easy as simply choosing to become a Ltd company is it?!

consh

No it's not. It's only worthwhile going limited if it would be a benefit to the would be directors while at the moment it would be more of a hindrance than a beneift.

CLAPTON

It looks as if the insurance was a single payment type of about 3,400 which was added to the loan... so in effect you borrowed 13,500.

This would explain why your settlement figure is about 13,000 even though you have paid six month worth of payments. It might be possible to make a claim for the insurance payment on the basis of being mis-sold and inappropriate to your circumstances.
I'm afraid I don't know if insurance mis-selling is different with business loans.. try the threads about PPI reclaiming.

consh

Thanks Clapton, That may well be the case. I'm going to wait for the copy loan agreement to come through then check through. I won't be happy if they are charging me those kind of sums for insurance

Crystallady

As it was a business loan I would expect there to be an arrangement fee - it is unusual for businessloans to be fee free.
I worked for the commercial side of a high street bank for 15yrs+ and we always charged a fee of between 1% & 2% on loans but our rates were nowhere near 20% so maybe there was no fee because of the high rate.