Paying a loan off in full settlement

trooperboo

Am looking for paperwork now.....

Am i allowed to name them?

minimadtrix

trooperboo wrote: »

Ah, i like that suggestion, but who will offer me a credit card on the income i have at the moment?

And i still have to pay my parents back for the £5K they will 'give' me.....

Doh, didn't think about that, but as far as your parents are concerned, could you suggest paying back once you're in FT work again?

trooperboo

Ok so i have now found a statment dating back to October. This was the first and only statemnt the company have ever issued me. Well, i lie, the FIRST one was sent a week or so before this one BUT it was blank!!! That one detailed how it was now a requirement for them to issue yearly statments to us. This one details all the payments made in the last year (up until September).

No where on this statement does it say that it is a fixed-interest agreement, and i see that the interest is calculated and added monthly. But i am quite sure i have had it in writing that this is a 'fixed interest' loan?????????

Now, on this statment it says that we still owe £9977.43. I have since made (or will have by the end of this month) repayments of £1609.64. That leaves a balance of £8367.79. I want to pay £5K in full settlment, or £6K at the absolute most.

As for credit rating damage, i do not want this at all as we have (luckily) a very good credit rating. If the lender decides / chooses to "accept" the amount we are offering and we have never defaulted, why would this affect our rating?

trooperboo

Oh and one more thing.....whats this business about "Unenforceable Loan Agreements"? Ours was taken out pre-April 2007, so how could i find out if this applies and what do i do?

CHR15

By fixed Interest, I reckon you mean a fixed apr, i.e not a variable rate loan.

Don't even go there about unenforceable!! You did borrow the money!

jamesd

Just ask them for an early settlement figure calculated according to the Consumer Credit (Early Settlement) Regulations. They will tell you a figure that will be valid for 28 days and which includes interest for those 28 days.

There's a legal right to completely pay off a loan at any time and the amount of interest that they can charge is specified by the regulation. It's calculated in a similar way to a mortgage, with each payment you made over the years reducing the amount owed and interest payable on it (same APR, just less borrowed, so the portion of each payment that is interest gradually decreases). There's no adverse effect on your credit record for doing this because all you're doing is using your normal legal right to pay it off early.

This right of early settlement is different from defaulting on a loan agreement and then negotiating a reduced settlement payment, lower than the one from the early settlement regulations calculation. That's done only when a lender thinks that they don't have any chance of getting all the money back from you.

Mutton_Geoff

If you took out a loan that's costing you £25k over 5 years, then your parents loan would cover one years worth of payments. Surely you can be confident that you would be working again by then? Why not get your parents to service the loan (through you so as not to involve the loan company) and concentrate on finding other work instead of working out ways to avoid your commitment to the loan company.

If you find work sooner, then you won't use up all the £5k credit with the folks and your credit rating will remain intact.

You say the loan was taken out with your partner. Can they work more to cover the payments? Can't you get part time or casual work to pay the loan? Even at minimum wage you need work only 16-17 hours a week to cover the loan.

What was the loan used for? Could this item could be sold to further raise money?

Although you're probably in shock with the redundancy, you probably have more options than you think to avoid a severely damaged credit rating.

trooperboo

Hi

Thanks again for replies. Re: "Unenforcable", i just wondered what this was.

I am indeed concentrating on finding a new job, dont think i'm not! No, it was just that my folks offered to loan me £5000 if it was that the loan company would accept this as full settlement. I think £6000 will be nearer the mark, I am working on the theory that if we borrowed £20K and had paid all of that back, then that was at least something in our favour. The money we borrowed was for essential repairs to our house. So no i can't sell what it was that i borrowed the money for.

Using my parents money to cover the monthly repayments until such a time that i am earning the same salary was another option of course.

trooperboo

jamesd wrote: »

Just ask them for an early settlement figure calculated according to the Consumer Credit (Early Settlement) Regulations. They will tell you a figure that will be valid for 28 days and which includes interest for those 28 days.

There's a legal right to completely pay off a loan at any time and the amount of interest that they can charge is specified by the regulation. It's calculated in a similar way to a mortgage, with each payment you made over the years reducing the amount owed and interest payable on it (same APR, just less borrowed, so the portion of each payment that is interest gradually decreases). There's no adverse effect on your credit record for doing this because all you're doing is using your normal legal right to pay it off early.

This right of early settlement is different from defaulting on a loan agreement and then negotiating a reduced settlement payment, lower than the one from the early settlement regulations calculation. That's done only when a lender thinks that they don't have any chance of getting all the money back from you.

Hi

Thanks for this info. What i am meaning is though, if they give me an early settlement figure of "X", how do i go about asking them if they will accept and amount of "Y" to pay off the loan, providing that "Y" covers everything i originally borrowed?

All i have ever heard is that we should talk to our creditors BEFORE we are in a mess, and yet i'm left thinking that they won't help me until i've defaulted?

jamesd

X is your legal right and theirs.

If you want to pay less than X then you have to wreck your credit record by defaulting, then hope that they might not take you to the county court and enforce a CCJ by sending in the bailiffs to seize property to sell and recover the debt. If they don't go for those options then they may instead accept a lower figure Y. Y is less work but if they think they can get more by selling to a debt collection agency, they will do that instead and the DCA can then pursue you.

You're right that creditors generally won't accept this sort of thing until after you have defaulted. They might accept reduced monthly payments before that but probably not a reduced complete settlement amount.

What you can do instead is approach one of the debt help charities. They can negotiate arrangements like freezing interest and reducing monthly payments to an affordable level.