Strange call from Lloyds

thechippy

Working with a colleague today and he had a strange call from Lloyds out of the blue.

He has a cc and loan with them. The cc is about 9k and the loan 10k.
They explained how it would take him the next 20 yrs etc to repay the card if only doing min payments etc.
They offered him another loan to cover both over 5 years - makes sense, yes?
But why did they do it? He never misses payments for example. However, his account does not have as much money going through as normal and his savings acc with them has dwindled.

Are the banks suffering from the cca and unenforceable thing to the point where they are trying to find enticing ways to get some clients to refinance, so the new debt would definately be enforceable should the client get in trouble?
Or was it just sound advice?
Thing is, they make thier money from interest, so would be better for them to just let him carry on paying the card for the next 20 years!!

Has anyone else had a call like this?

CLAPTON

without knowing the details its impossible to guess

what are the APRs of his current debts?
how much is he paying each month?
whats the APR of the proposed new loan
etc.

thechippy

He didn't go into that much detail. but the new monthly payment was not a lot more than the existing 2 combined, but he'd be clear in 5 years rather than the existing loan clearing in 3 years and the card going on for 20

Anyway, nipping out for that Friday night curry, so chat to you guys later....

Grovester_2

It's tidier, for the bank, if they got everyone to do this lots less admin, plus, it brings Lloyds back in to your mates head so they can try and sell him some other stuff. Afterall they don't want another lender to come in and steal their customer ...

jonesMUFCforever

Pure sales driven - a loan for the bank (did they sell ppi?) = points toward targets - at branch levels it does not matter whether the interest is less for the bank or not as a shareholder it does!!

Cash_Flow

thechippy wrote: »

He didn't go into that much detail. but the new monthly payment was not a lot more than the existing 2 combined, but he'd be clear in 5 years rather than the existing loan clearing in 3 years and the card going on for 20

Anyway, nipping out for that Friday night curry, so chat to you guys later....

So did he refinance with Lloyds??

The_silver_surfer

The main reason will be they have to be seen to be offering 'best advice' to their clients as they are covered by the FSA (Financial Services Authority) who will insist that 'best advice' is offered.

If you are looking for a more pessimistic type of answer and wondering how it benefits the bank: It also locks him in. I.e. if he had a bit of a windfall he can just pay his credit card off where as with a loan you are locked in. It is possible to pay it off early but you are normally hit with early repayment charges.

hotspur84

The_silver_surfer wrote: »

The main reason will be they have to be seen to be offering 'best advice' to their clients as they are covered by the FSA (Financial Services Authority) who will insist that 'best advice' is offered.

If you are looking for a more pessimistic type of answer and wondering how it benefits the bank: It also locks him in. I.e. if he had a bit of a windfall he can just pay his credit card off where as with a loan you are locked in. It is possible to pay it off early but you are normally hit with early repayment charges.

There is a legal way around the ERC. Your allowed to make over payments on lloyds tsb loans. The solution is to pay off all but one months direct debit and let that clear as usual. Job done an penalty free.

thechippy

Cash_Flow wrote: »

So did he refinance with Lloyds??

Not yet.

The paperwork came through, but he can't make up his mind.

I've also heard of others getting these calls now.

Call me a pessimist, but it would really not surprise me if going through records, they find a client who's original cca is non existant or non compliant, to try to tie them into something new that is....:eek:

Cash_Flow

thechippy wrote: »

Not yet.

The paperwork came through, but he can't make up his mind.

I've also heard of others getting these calls now.

Call me a pessimist, but it would really not surprise me if going through records, they find a client who's original cca is non existant or non compliant, to try to tie them into something new that is....:eek:

Do you know what APR they offered him?

thechippy

I'll try to find out.