Interest on PPI & early repayment?

mensch_2

Thanks for a wonderful site! As a newbie it's been great reading through and seeing how it's done. Having complained and been stonewalled several times about charges I now feel positive again.

My case may be pretty typical to start with, but gets ugly. I took out a loan in 2002, which I arranged over the phone, and when I got to the bank to sign the forms found that they'd added PPI. I challenged this at the time, mainly as the PPI was a lump sum, which had then been added to the loan, and four years' worth of 8.8% APR then added to it. Needless to say the final number was quite scary. It was explained to me that I'd not been working for very long (still in the 3 month probationary period) and this was necessary to make sure that I was covered.

Pretty clear misselling so far? Now it gets messy.

I paid the loan 14 months early off early in 2005. Supposedly there were no penalty charges for this. Because the interest had been added at the start of the loan there was a real problem in getting a refund on the PPI and calculating a final payment. I was told that HSBC's risk was higher for the first years of the loan, therefore I'd actually been paying higher PPI costs for the first half of the loan, and therefore had paid off less of the capital balance of the loan than I thought. This was not explained at any point until I tried to settle up early.

So not only did I not get as much of a refund on PPI as I'd hoped, I had to pay more to exit the loan. So much for no exit fees!

So my question is: do I claim for misselling of the PPI? Can I claim back early redemption charges? If I shouldn't have paid PPI, then I would have reduced the capital balance of the loan by more and had to pay less to settle up. So do I have a claim for some of the loan interest to be returned to me? Is there an issue that the loan started in 02 and was settled in 05?

Would appreciate advice from others more clued up than me!

di3004

mensch wrote: »

Thanks for a wonderful site! As a newbie it's been great reading through and seeing how it's done. Having complained and been stonewalled several times about charges I now feel positive again.

My case may be pretty typical to start with, but gets ugly. I took out a loan in 2002, which I arranged over the phone, and when I got to the bank to sign the forms found that they'd added PPI. I challenged this at the time, mainly as the PPI was a lump sum, which had then been added to the loan, and four years' worth of 8.8% APR then added to it. Needless to say the final number was quite scary. It was explained to me that I'd not been working for very long (still in the 3 month probationary period) and this was necessary to make sure that I was covered.

Pretty clear misselling so far? Now it gets messy.

I paid the loan 14 months early off early in 2005. Supposedly there were no penalty charges for this. Because the interest had been added at the start of the loan there was a real problem in getting a refund on the PPI and calculating a final payment. I was told that HSBC's risk was higher for the first years of the loan, therefore I'd actually been paying higher PPI costs for the first half of the loan, and therefore had paid off less of the capital balance of the loan than I thought. This was not explained at any point until I tried to settle up early.

So not only did I not get as much of a refund on PPI as I'd hoped, I had to pay more to exit the loan. So much for no exit fees!

So my question is: do I claim for misselling of the PPI? Can I claim back early redemption charges? If I shouldn't have paid PPI, then I would have reduced the capital balance of the loan by more and had to pay less to settle up. So do I have a claim for some of the loan interest to be returned to me? Is there an issue that the loan started in 02 and was settled in 05?

Would appreciate advice from others more clued up than me!

Hello and welcome.;)

You can go for reclaiming on the PPI and the interest, but to my knowledge not the redemption charges, unless someone can clarify on this.
Do you mind writing what bank this is about, this is also so that others who have had dealings with the same ones may also post up as well, with some useful advice for you.

You will find the link below useful, with the guidelines of reclaiming, template letters, a checklist of mis selling reasons, so that you can write what applies to you.
I would also post by recorded delivery as well, this is your proof of posting.
http://www.moneysavingexpert.com/reclaim/ppi-loan-insurance

You write to the ones who sold you the loan.

Good luck with this and please post up for help if required.

marshallka

I have a feeling this would not have been early redemption charges but rule 78 would have been used at settlement in both the loan and probably the PPI as well. This was a method that was used to calculate rebates on interest but was only ever fair to the lenders. It was abolished for this reason for all new loans since 2005. You can actually still make a complaint for misselling if you feel this was missold to you. As this was a bank that sold this and although it was 2002 you would still be able to make a complaint to FOS if they do not uphold it I would think as "most" banks would have been under jurisdiction at that time.

mensch_2

Thanks for the advice. It was HSBC, and I think their problem came in the hand off between the telephone and the branch where I signed the agreement - the bank had printed out the form with the loan on it, and couldn't change that without getting the loan re-approved. Will let you know how it goes.

Do you thnk I should move my savings to another bank before I start, just in case? I'm a bit worried that they will blacklist me... and my savings might be at risk as a result.

di3004

mensch wrote: »

Thanks for the advice. It was HSBC, and I think their problem came in the hand off between the telephone and the branch where I signed the agreement - the bank had printed out the form with the loan on it, and couldn't change that without getting the loan re-approved. Will let you know how it goes.

Do you thnk I should move my savings to another bank before I start, just in case? I'm a bit worried that they will blacklist me... and my savings might be at risk as a result.

Hi there

They should not close your account due to this, but you should always do what you feel is best for you.
Your in your rights to reclaim what is rightfully yours.;)