early settlement of loan

ahsan

I have taken out a loan from HSBC in 2005. Details are as follows

loan:£9000
loan protection:£1910
Total loan: £10910
Total Payable: £12866.71
APR: 6.9


On 10th July, 2009 45 repayments out of 60 will be paid. I requested a settlement figure to be calculated on 10th July from my bank last week, details of which are as follows


Outstanding Balance: £3431.20
Less rebate of Interest: £77.46
Total Outstanding Balance Net of Interest Rebate: £ 3353.74
Less Refund of Insurance Premium: £95.06
Settlement Figure: £3258.68


However my loan agreement's early settlement clause says, If three quarters of the repayments have been made (which will be the case after 10th July) then I have to pay £2565.19. It also says


“In calculating the amounts shown, no account has been taken of any variation which might occur under the agreement and the amounts are estimates only calculated on the assumption that all payments are made on time. You may also be entitled to a partial refund of the Personal Loan Protection Plan Premium paid, provided that a claim against the Policy has not been made prior to early settlement of your loan.”


Keeping that in view the insurance refund should be added on top of £2565.19. To confirm there were no variations made in my agreement and no claim was made against the Loan Protection Insurance either. All the repayments were paid on time by direct debit to my bank account.


I assume that I am liable to any payments agreed in my Loan Agreement which is £2565.19 minus the insurance refund.


Please advice me how should i handle this problem. I tried to settle the loan when half of my repayments were left and there was a discrepency at that time as well and i walked in to one of the branch and the bank manager failed to explain the reasons at that time as well and i droped the idea of early settlement.


i hope somebody can help


best regards

Rafter

ashan,

Crunched the numbers and it looks like the £2565.19 is calculated on the £9000 loan amount and not the additional loan taken out to pay for the insurance up front.

With the insurance added on, their settlement numbers look about right.

If the piece of paper with the £2565.19 on it also has the loan amount of £10,910 then you can try a written complaint on the basis that there is an error in your loan documentation and see if that gets you anywhere.

However, in my view their numbers look about right.

There is then a secondary issue about whether you were ever entitled to claim under your PPI policy because of existing health conditions or employment type or if the HSBC salesperson ever implied it was compulsory in order to secure the loan. In this is the case you have a misselling claim and could potentially get the whole premium and interest refunded.

Good luck

R.

ahsan

Thanks a lot Rafter
I thought nobody will reply to my post. Is it possible for you to share the formula for calculations, it will be great thing to learn. If it is too complex to write up then forget about it.
Even if HSBC made a mistake do you think I still be able to force them to settle on the figure in the loan agreement as it is part of the agreement no matter if it is right or wrong.
The first page of the loan agreement has all the following figures which I pasted earlier
loan:£9000
loan protection:£1910
Total loan: £10910
Total Payable: £12866.71
APR: 6.9
The second page has an early settlement clause which says what I have to pay to settle if quarter, half and three quarter of repayments is paid. I have already sent them a message through e-messaging and waiting for their reply.
If they don’t agree as one of the branch manager I saw when half of my repayments were left what can I do about it.


[FONT=&quot]regarding PPI when i was taking out a loan the person serving me said if i dont agree to buy PPI, i have to see the branch manager and explain to him how i will pay repayments if i get sick or go out of job. So i took PPI as well[/FONT]

ahsan

any other thoughts ?