Bank Loan

joycegill123

Can anyone advise me on this. My Mum who is a pensioner at 76years of age took out a loan 3 years ago for £5,000.00 her only income is a state pension of £139.40 pw. Last year the Bank allowed her to up her loan to £7,000.00. My Mum now has sleepless nights worrying how she can afford £186.09 per month payment.

Will she be able to ask the bank to reduce her monthly payment to something more affordable. In reality should the bank have increased her loan knowing her only income is a state pension?.

Any advice is more than welcome.

Thanks

Rafter

This does sound like irresponsible lending to me.

Is the debt secured on her house and does she own her own home.

Otherwise I would suggest filling out a statement of affairs with her using the attached link. Then contact citizens advice, cccs or national debtline and get their advice about what offer to make to the bank or next steps.

Good luck

R.

http://www.makesenseofcards.com/soacalc.html

Tixy

The bank will have assessed her risk and decided to lend the money on that basis, possibly because she had always kept up to date with the previous repayments on the lower figure. I guess maybe the question is should she have applied to increase her loan knowing her only income is a state pension? (I'm not having a go at your mum, just saying the bank are not to blame).

Firstly she could approach the bank and ask to extend the term of her loan. You might want to help her write out an income & expenditure account to show what she has to pay out of her income before she pays her loan. If they will then do double check the deal and the APR involved.

If they won't and she cannot make these large payments as well as pay for basic living costs (rent, ctax, utilties, food etc) then she may need to default on the loan and then to offer a repayment based on what she can afford, this will have a negative impact on her credit score but it sounds like she can't afford to have any future credit anyway.

Does she have any other debts? loans, cards, overdrafts etc?

joycegill123

Hi

Thanks for your advice, I know she does not have any other outstanding debt. I will help write out an expenditure form and see the bank with her.

Thanks again.

Tixy

Joyce

This is a good form to use to work out what she can afford - http://www.makesenseofcards.com/soacalc.html

EDIT: oops see rafter already gave you this link!