HSBC - DMP Acceptance or Loan?

yellowpinky

I've just started a DMP with Payplan, about a month in. I've had two acceptances so far (yay!). I have eight creditors, seven of them credit cards and one overdraft, and the o'draft and one of the cards are with HSBC, my ex-bank. I got a pack in the post today from HSBC which appears to be an acceptance of the DMP arrangement, but it seems to be set out in the form of a loan agreement. There's lots of pages, and I have to sign and return within ten days. The payments are £30.87 (exactly what I'm paying jointly for the card and overdraft through PP), over a period of ten years up to 2019, which is pretty much what my DMP period will be. Looking closely at the terms, this is what it says about interest -

Interest rate: 0.00% over our base rate, which, at the date of this agreement gives a variable rate per annum of 0.00%.

The "total charge for credit", "total interest" and "arrangement fees" are set out as £0.00. There's also a standing order mandate to sign for any arrangement/security fees to come out of my current account with them though it has already said these are £0.00. I have a new current account with Co op by the way, obviously I'm not using HSBC any more. I've decided to ring PP about this tomorrow but would appreciate any feedback from anyone else who has had this, as every time I think about it or read it through again, my brain fries that little bit more! Is this what they normally do?

Thanks in advance, YP

MyLastFiver

It looks to me like it could be a Managed Loan agreement. Although terms look favourable now they could change them in the future.

Do not let them have a standing order mandate. Do not sign a loan agreement. Just let Payplan send the payments every month.

yellowpinky

Thanks very much for your reply MyLastFiver.

I e-mailed Payplan in the end and offered to send a copy of the "agreement" for them to look at. They had a look and advised not to go ahead with it as HSBC would lump both debts together and could end up charging higher interest because of this and also chase me for payment more. They did say it was my choice and if I did decide to go ahead they would just update my records to fit in with it. I was never comfortable with the idea even though it looked good on paper, so will take their advice, and yours, and not touch it, and continue with payments with Payplan.