Secured loan

blienafa

Hi there,

I need help,

I have a secured loan I would like to get rid of and movining to an unsecured loan. The loan is 18K over ....25 years, I need to reduce it but do not know how/where to start. I went to my bak and offered me stupid alternative 13%....

I need help

Many thanks in adance.

thriftymomma

What apr is thw loan at and does it have any penalties for overpaying? Your t's and c's should give you this info.

_Andy_

Why do you feel 13% is 'stupid'?

halifax71

_Andy_ wrote: »

Why do you feel 13% is 'stupid'?

13% is probably the going rate now but it is stupid compared to what was on offer 2 to 3 years ago.

My secured loan was sold to me at 3.4% above FHBR (not a direct link but an inferred link in T&C). That was when FHBR was 5%. With FHBR now at 1.5% then to sell at 13% is a massive hike. Based on the bank borrowing at FHBR then 13% is a massive 766% profit ((13-1.5)/1.5). The simple fact is that banks are now compensating for their PPI misselling.

At least you can make an informed choice now as they are being sold at that extortionate rate.

jonesMUFCforever

I'm confused! Either it is connected to FHBR or its not; there is not an inferred link.
Could you copy and paste the actual wording of your agreement on here for us to have a look?

blienafa

Thank you, have you managed to unsecured your loan with Halifax fairly easily?

halifax71

jonesMUFCforever wrote: »

I'm confused! Either it is connected to FHBR or its not; there is not an inferred link.
Could you copy and paste the actual wording of your agreement on here for us to have a look?

Maybe inferred not the right term. FHBR is in the clause but it is not tracked.

"We may from time to time vary our interest rate. We may increase or
decrease our interest rate to reflect a change which has occurred, or
which we reasonably expect to occur in interest rates generally, or to
ensure that our business is carried on prudently, efficiently and
competitively. The interest on your account will not in any twelve
month period, vary by more than twice the variation in the Finance
House Base Rate published by the Finance and Leasing Association during
the same period. If for any reason, the Financing and Leasing
Association ceases to publish the Finance House Base Rate we may refer
the variation in our interest rates to any other Base Rate which in our
reasonable opinion best matches that rate.”

This basically meas they can do what they want, however there is a partial link to FHBR which has been worked out as follows: - FP = FirstPlus

1) If FHBR falls with respect to one year ago, then if the FP rate is lower than it was one year ago, FP will not change it. If the FP rate is higher than one year ago, FP will reduce it to its level of one year ago (this is our situation now, as reductions are restricted to returning customers to the FP rate of 1 year earlier - no more, no less.).

(2) If FHBR is the same as one year ago, then if your FP rate is lower than it was one year ago, FP will rise it to its level of one year ago (that’s when you get the type of letter saying: “we increased your rate but we made sure you don’t pay more than you did a year ago”). If your FP rate is higher than it was one year ago, then FP will reduce it to its level of one year ago (that’s what happened to some of us in March last year).

(3) If FHBR rises with respect to one year ago, then it doesn’t matter whether your FP rate is lower or higher than one year ago, FP will increase it, by up to twice the FHBR increase from one year ago.

Where is the unfairness in this?:

First, it is a mechanism asymmetrically applied: FP always increases its rate in case 3, so it could and should also always decrease in case 1, but it doesn’t.

Second, especially when you look at case 2, the arbitrariness is clear. It doesn’t really matter what FHBR does from month to month, they just apply a formula that makes sure that their rates stay on an INCREASING TREND, by pegging your current rate to what it was one year ago.

Anything they cite as explanation: base rate, house prices, equity, commercial judgement, is a downright LIE. THey only use an automatic formula to make sure our rates never go down in TREND.

When questioned FP state that their terms and conditions are clear and
that all customers would have been fully aware of the circumstances of
Interest Rate changes. I bed to differ.

The full implications of this are yet to be felt. The latest accounts
of FP show a business in serious trouble. The simple fact is that once
the Bank of England rate starts to increase over the coming few years,
FP will have to raise theirs. If they don’t they will go bust. The
above clause allows them to double any FHBR rise.

I am awaiting a decision from the Financial Ombudsman and I have
alerted the OFT as these actions are in clear breach of the Unfair
Terms in Consumer Contract Regulations.