Repaying a Barclays Home Improvement Account Loan early - huge penalties?

buglawton

I paid for a home improvement project and the Barclays Partner Finance was arranged by the company that did the work (actually I saw this as a sort of insurance in case the co went insolvent during the project).

Salesman assured me that I can repay this loan early and the max penalty will a couple of months interest, per the Consumer Credit Act. And an FAQ leaflet issued by the same home improvement co also says similar things but no real details.

Reading the Barclays fine print, if I paid at their default terms - 120 months at 25% APR - the £10k would come to nearly £30k! And the early payment penalty could easily be £10k itself!

Tried to research the Consumer Credit info to get clear confirmation that repaying early, is it true that the Act overrides anything in the Barclays loan contract. But can't find clear advice online - can anyone point me to a good link?

DesG

When was the loan taken out?

Is there any PPI involved?

Have you asked Barclays for an early settlement figure?

Cheers, Des.

buglawton

No PPI involved, just a high interest rate and big early repayment penalties. Loan was agreed to about 2 months ago, repayments commence soon. Would like to research my rights before calling Barclays.

[ edit ] The Consumer Credit act seems to lay it all down with examples in this doc http://www.opsi.gov.uk/si/si2004/uksi_20041483_en.pdf - what surprises me is that no-one (not even Moneysavingexpert) has produced a simple explanation for the man-in-the-street. The top question of all is: If the CCA prescribes that certain types of loan can be settled early with a legally decided 'rebate' as they call it, then why do finance companies write onerous loan contracts - in this instance, 25% APR over 120 months (so that £10k becomes £30k) or a £10k early repayment fee? Presumably these contracts (specifically the early settlement clauses in them) are not enforceable in law... or?

DesG

with no PPI involved, and the loan for 10K taken out 2 months ago, you can settle early with the maximum 2 months interest penalty.

At a quick calc, it will cost you £420 plus your outstanding capital amount to settle.

Just call them up and ask them for a settlement amount, it should not be more than £10,400

Cheers, Des.

JTucker

Now talking about interest payment get some more information about it cause it can kill you more than anything. You haven't mentioned about the time you have taken the loan and for how many months or years you need to make payment. Far as I know long term payment included high i.r and vice versa.

buglawton

@Desg - that is reassuring to hear, it matches what the Salesman said, just finding anything official to confirm it is not easy.
@JTucker, I did say above when it was signed up, when payments commence, the rate and the term. Yes indeed that rate & term can kill - wonder why MSE does not have one of it's great guidence articles on this topic.

DesG

The CCA is law, thats about as official as you can get

Cheers, Des.