Offer from Welcome too good to be true?

PaulHolt

Hi there, new to the forums but have been lurking for a while now.

I’m after some advice to do with a recent offer Welcome Finance have sent me. In January of 2009 I took out a loan with Welcome, I’m a bit wiser now.
I have currently paid off £1,714 (£131.88 per month). PPI applied to the account was £679.59

I wrote to them to reclaim the PPI for the usual reasons, good news is that the complaint has been upheld, but I am confused by their offer. The letter explains it as putting me into a financial position I would have been in had I not taken out the PPI in the first place. They have offered to restructure the loan and they have sent me another contract to sign and return. I am reluctant to sign and return anything until I fully understand it (this is how I got into trouble before).

I have done some calculations and I would like someone who is used to dealing with this kind of thing to have a look over them to see if I am doing it properly.

Old Arrangement with PPI
Credit Supplied - £2,754.59
Interest Charge - £2,068.15
Total - £4,822.74
Payments Made - £1,714.44
Balance - £3,108.30

New arrangement offered without PPI
Credit Supplied £2,000.00
Interest Charge £1,576.00
Total £3,576.00
Payments Made £1,714.44
Balance £1,861.56

That’s a difference on the outstanding balance of £1246. Does this sound right? They have also said that as they are restructuring, my monthly figure will be £99. According to them, if I had paid the 14 payments at £99 since the beginning of the loan I would of paid off £1390.90 and they will refund me the difference between that and what I have actually paid off (£1,714) making my refund £323 + 8% APR Interest. Of course, I will knock this off the balance of the loan. There is also a slight difference on the two agreements; my previous contract was 50.94% and the new one 52.07%. Should I argue this?
This seems like a pretty good deal to me, from what I can see, instead of refunding the PPI they have applied the payments received to a restructured loan and decreased the balance significantly, but this is Welcome we are dealing with so it’s best to be sure.

Cheers for Reading.

Paul

di3004

PaulHolt wrote: »

Hi there, new to the forums but have been lurking for a while now.

I’m after some advice to do with a recent offer Welcome Finance have sent me. In January of 2009 I took out a loan with Welcome, I’m a bit wiser now.
I have currently paid off £1,714 (£131.88 per month). PPI applied to the account was £679.59

I wrote to them to reclaim the PPI for the usual reasons, good news is that the complaint has been upheld, but I am confused by their offer. The letter explains it as putting me into a financial position I would have been in had I not taken out the PPI in the first place. They have offered to restructure the loan and they have sent me another contract to sign and return. I am reluctant to sign and return anything until I fully understand it (this is how I got into trouble before).

I have done some calculations and I would like someone who is used to dealing with this kind of thing to have a look over them to see if I am doing it properly.

Old Arrangement with PPI
Credit Supplied - £2,754.59
Interest Charge - £2,068.15
Total - £4,822.74
Payments Made - £1,714.44
Balance - £3,108.30

New arrangement offered without PPI
Credit Supplied £2,000.00
Interest Charge £1,576.00
Total £3,576.00
Payments Made £1,714.44
Balance £1,861.56

That’s a difference on the outstanding balance of £1246. Does this sound right? They have also said that as they are restructuring, my monthly figure will be £99. According to them, if I had paid the 14 payments at £99 since the beginning of the loan I would of paid off £1390.90 and they will refund me the difference between that and what I have actually paid off (£1,714) making my refund £323 + 8% APR Interest. Of course, I will knock this off the balance of the loan. There is also a slight difference on the two agreements; my previous contract was 50.94% and the new one 52.07%. Should I argue this?
This seems like a pretty good deal to me, from what I can see, instead of refunding the PPI they have applied the payments received to a restructured loan and decreased the balance significantly, but this is Welcome we are dealing with so it’s best to be sure.

Cheers for Reading.

Paul

Hi Paul and Well done to you :beer:

I'm sure someone will take a look at these for you, I'm useless at workings out and maybe wrong if left to me.......:o.

It does actually look good and I'm sure it is that of what they have said.......:T.

So what they are doing is refunding you all you have paid in ppi, as if you never taken this out in the first place.

If they have upheld in your favour, did they mention anything about interest as well?
Sorry If I have mis read this.

I would also whilst waiting for some help on these calcs, check this thread out here in how the Financial ombudmans service calculates ppi refunds:
http://forums.moneysavingexpert.com/showthread.html?t=1596473

hope this helps as well.:beer:

PaulHolt

Hi Di, cheers for the Welcome (no pun intended

I think you read just fine. Its a strange one, what i was expecting was:

You paid X amount in PPI
We will refund you X amount + interest

From what i can gather they have recalculated the loan - the PPI, recalculated my monthly payment, deducted the new monthly payment x 14 of the balance and offered the difference + 8%.

di3004

PaulHolt wrote: »

Hi Di, cheers for the Welcome (no pun intended

I think you read just fine. Its a strange one, what i was expecting was:

You paid X amount in PPI
We will refund you X amount + interest

From what i can gather they have recalculated the loan - the PPI, recalculated my monthly payment, deducted the new monthly payment x 14 of the balance and offered the difference + 8%.

lol .

Yes I see what you mean here, well with a bit of luck someone will be here at some point shortly to check this over for you, who are used to dealing with figures.
Fingers crossed.;)

skinny-on-the-inside

Hi
The figures you have been given for refund seem about right but I would be declining to take the new restructured loan at the higher rate as its not exactly puting you in the position you would have been because it would have been a lower rate you would have been paying= less money paid to them

PaulHolt

Hey everyone, just a quick update. I have just gotten of the phone to the FOS about the slight change in APR on the new agreement. She said that it is a normal thing, because the initial loan was for a higher amount I would have been offered a better interest rate.

Because the new loan is for less, my interest rate would be higher.

However, she also said that I could argue that if I had known the interest rate would be that high (the new rate), I would never have taken out the loan in the first place.

Anyone had any experience on this?

Cheers

marshallka

PPI element was 24.67%. That means that £32.53 was going towards paying the loan PPI.

Your figures above do not add up though. If your loan was over 48 months (?????) with an APR of 50.94 this would mean repayments of £135.33 and a total repayable over the whole loan including interest of £6495.84??? You have put down total loan and interest being £4822.74??

How long was the original loan over?

PaulHolt

Hi Marshall, below are some figures taken from the contract.

Total amount of credit : £2,679.59
Total charge for credit: £2068.15
APR (variable) 50.94%
Rate of interest per annum 47.64%
Duration (months) 36
Amount of each monthly payment £131.88


Cheers

Paul

marshallka

PaulHolt wrote: »

Hi Marshall, below are some figures taken from the contract.

Total amount of credit : £2,679.59
Total charge for credit: £2068.15
APR (variable) 50.94%
Rate of interest per annum 47.64%
Duration (months) 36
Amount of each monthly payment £131.88


Cheers

Paul

Ok, so if the APR was there said 50.94 and your loan was over 36 months then the repayments (although variable) would have been £146.56. This is assuming that you total loan with the PPI was the £2679.59. Nothing really adds up though.