HSBC - PPI Repayment / Rejigged Loan

Ham_On_Rye

Hi - after reading many threads about PPI I decided last week to do the same thing with my loan. I was contacted two days after sending my formal letter requesting cancellation & refund, and was told that ecverything had been arranged and I would be getting forms to sign and return in the post. These arrived and it seems that the standard practice is to cancel the original loan, and set up a new loan for the balance. The problem is that the amount of the new loan is actually only £1,130 less than the original loan, despite me having already made 17 payments. What have they done? The figures are as follows:

Original Loan £23,750 = Interest £8,052.20
PPI £7,400.00 + Interest £2,508.90

One payment of £433.60 made, 16 payments of £434.50 made subsequently.

New loan: £22,620.00 + Interest £3,823.31

Any help/advice gratefully received...

Thanks

Ham_On_Rye

No replies which is a little disappointing, maybe too many PPI posts on here already...

anyway - an interesting development, and I'm posting it here to find out if this is unusual.

I went to the bank and spent two hours with them this lunchtime going through their figures for my loan. It seems that the amount of unpaid PPI to be recredited to my account is £4,901.23, excluding interest, which means that in my loan repayments to date I've paid off £2,498.77 of the PPI element. They're obviously not considering a refund of PPI payments made to date, though I will take this up with them once my initial problem is sorted.

I've queried the amount to be credited with the bank for an obvious reason - the amount of PPI capital repaid works out at £146.99 per month, when the monthly repayment on my loan agreement, INCLUDING interest, is only £103.22. In other words, either they've "Accidentally" been applying too much of my monthly loan repayment to my PPI debt, or they're simply trying it on and not refunding me enough.

I've asked for a full breakdown of the apportionment of my repayments to date, split between loan capital, PPI, and interest.

Does anyone on here have any experience of this kind of situation? Am I missing something in my workings? (I'm aware of the Rule of 78, and as far as I'm concerned this just makes the amount of PPI to be refunded even higher..)

cheers

robert_harper_2000

My brother only had a small loan but it had PPI which I complained as mis-sold ( I have a template for ideas ) they still argued but after a final response I actioned court! They backed down and paid up. Don't rely on their customer services too much there are other ways.

ArchieB_2

Over how many months is your loan? Are they keeping back any commission on the loan sale? Does sound too little.

Why are you going to try to reclaim the PPI premiums to date? Were you missold it?

robert_harper_2000

was mis-sold. Full refund.

Ham_On_Rye

The loan was over 96 months, the adjusted balance has been calculated to be payable over 60, as opposed to over the remaining 79 months of the original loan, which is all fine.

There is definitely a discrepancy between my calculations and the banks, and I'm positive I'm correct in my workings. The promised phone call for today hasn't happened, which means the central interest unit at HSBC haven't sent the breakdown to my branch as instructed. Perhaps they're busy reworking the figutres for their own gain, who knows?

The thing is, the difference as far as I'm concerned is around £1,300, give or take a little for the Rule 78 adjustments, which affects the amount of loan that the bank want to provide me to pay off the adjusted balance substantially.

If there is any commission involved, then this wasn't mentioned to me from the outset, and is thus irrelevant. Not gonna back down on this...

Tootsie_Roll

Have you factored in any penalty for cancelling the insurance early ? It could be that you have to pay 3 months premiums anyway + early redemption penalties on the loan (both the PPI element and loan).

Without going into great detail your calculations look a bit too simplistic and I certainly don't see how applying rule of 78 is going to work in your favour.

Ham_On_Rye

my assumption on Rule of 78 working in my favour is based on there being more of the unpaid PPI to be refunded than if the interest was apportioned evenly as 96 equal chunks, ie proportionally more interest has been paid at the start of the loan and therefore more of the PPI is outstanding.

If I have been penalised for ending the PPI early, then I wasn't informed of this at any time by HSBC and therefore it will need to be refunded. And even if I accept a penalty, surely it's not as much as £1,500? By my calculations approx. £820 of interest has been paid off in 17 payments of £103, which means the amount of PPI paid off is £931, leaving roughly £6,470 to be refunded, not £4,901.

Is this too simplistic? What am I missing out?

Ham_On_Rye

Right - final instalment of this saga.

Went to the bank again, after I received a breakdown of interest payments made so far.

It seems, and I suppose this is logical, that on top of the Rule of 78 weighting for interest, the bank will also top load the PPI / Loan capital repayment ratio, to reflect the increased liability faced by the bank when the outstanding loan balance is higher.

In my case this meant that in the first 17 payments made, 63% of the capital repaid was in fact PPI capital and not loan. Still seems ridiculously high, and on top of that there is no mention of this anywhere in my loan agreement.

Is this common practice with banks? I will be contacting the Ombudsman anyway, as I'm not entirely happy that even though my signed loan agreement specifically sets out the amount payable for loan & PPI in two separate chunks, with the wording "£103.22 will be repaid every month for 96 months" as regards the PPI element, this is in fact not true.

Any advice/comments gratefully received.

Ciara111

robert_harper_2000 wrote:

My brother only had a small loan but it had PPI which I complained as mis-sold ( I have a template for ideas ) they still argued but after a final response I actioned court! They backed down and paid up. Don't rely on their customer services too much there are other ways.

I got my final response today... Maybe I should try that avenue? How long did it take for them to rethink it? I just hate being called a liar in round about terms!!!:mad:

lagerspice

Hi mate,

The front loading of the PPIi s detailed in the policy booklet however the rule of 78 is not listed anywhere. Apart from the front loading of the PPI you should pay exactly as per the schedule of the loan agreement you signed which is my angst with HSBC.

Let me know if you want to know more,