'Help! I'm paying £76,000 interest on a £20,000 loan' blog discussion 11 June 2010 at 11:45AM in Debt-free wannabe 15 replies 3.9K views

Former_MSE_Penelope

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Help! I'm paying £76,000 interest on a £20,000 loan" Blog.

Please click reply to discuss below.

lucyspedd

These companies that have closed for new lending will be aiming to sell these loans on to other companies as "asset or mortgage books" as soon as they can. Abit of bad publicity isn't going to help. And also it helps those other unfortunate "customers" feel less isolated, when they see others dealing with the same problems from the same company. I'm negotiating with my dispicable lender as we speak, having to pluck up alot of courage to do it.But will definately be naming and shaming when it's done.

Smallfries

i reckon its Welcome Finance..... just a guess

JimmyTheWig

See if they can make their mortgage interest-only until this other debt is paid off.
Then divert the extra money each month onto this secured loan.
Effectively this is adding the money onto their mortgage, as you suggested, but it is doing it without having to go to the bank and ask for more money.

Alternatively, would they be able to get a loan through Zopa?

Obviously the first question to any of this is are they allowed to overpay the loan?

amersall

put you money on its barclays first plus. that could even be without ppi!!!

marclandsman

I agree that this is an absolutely horrendous rate of interest.

This is the first time I have ever seen you suggest an IVA, and must stress caution. An IVA will only 'deal' with unsecured debts. The circumstances suggest that the debt is secured (albeit possibly not fully). This means that any element of the loan which THE FINANCE COMPANY considers secured will carry on. They therefore have the choice to value the security low (ie most of the loan will carry on for the rest of the 20 years) or high (in which case they may be able to take part in the IVA, but reject it if they wanted to).

There may also be an insolvency clause in the agreement which makes everything payable if they propose IVAs.

Bottom line is READ THE AGREEMENT before they take any action as it it could be very expensive not to do so. Of course, even if there is a penalty for early repayment it may be worth biting the bullet as it may be cheaper in the long run.

Marc

ps: why don't people read agreements before signing them, and why don't companies make them easier to read? How about suggesting using financial agreements in schools as part of English Comprehension lessons?

grandma247

marclandsman wrote: »

ps: why don't people read agreements before signing them, and why don't companies make them easier to read? How about suggesting using financial agreements in schools as part of English Comprehension lessons?

What a good idea!



If all else fails you could live on rice and beans for a time or use the suggestions on this site http://www.cheap-family-recipes.org.uk/ to cut your grocery bill to the bone so you can pay off more.

Gorgeous_George

I agree that the rate seems high but if there is a real risk of default, it needs to be a high rate. Not allowing companies to charge these rates would be to condemn the businesses that need the funding.

The answer is to pay as much as possible as quickly as possible (overpayment rules permitting).

GG

tyllwyd

One thing that I picked up on was the suggestion to add the loan to the mortgage. Just my impression from reading the forums here, but I'd have said it is very seldom that the people with large secured loans like this have enough equity in their homes to add the debt to the mortgage - they are more likely to be in negative equity if the loans and mortgage are added together.

Happytogetdebtfree

Hi, i have a secured loan and pay 218.28 and i only pay 86 off the actually loan ... as we cant borrow on the mortgage to get rid of it im doing my damdest to get some cash save to get rid of it asap they would not agree to lend us the cash for less that 20 years !! thats a wopping bit of money for them.. martins advice is all well and good but we went down this route a time when we needed the cash and it hasnt served us well it was a consolidation but looking at my figures you can see it didnt do the trick .... i had my lbm pretty soon after that... now since ive been facing things head on i have been accumulating cash to try get a good amount saved.. we can only over pay a 1000 per year and unless we then pay it off we have tow ait another 12 month the intrest will be allowed to change sept 2012 so im trying my best to get money cleared and saved to get rid of it before they have the nice chance to do that ...... its a bad route but at the time thats all we were offered a secured debt ... i feel sick but my owwn fault .. i know the companies are scandoulous but i didnt know about this board till after i had accumulated the debt... had that been the case i may have thought better ... :S x

oakhouse13

Paying off more means finding more income. This will be increasingly difficult if a double dip recession materialises. How many people will an across the board 5% pay cut in the public sector tip into far worse problems repaying debt?

When the former Home Secretary warned about an increase in crime because of the recession, the focus was on burglary but I wonder if it will be far more white collar crime as it becomes harder for companies to survive on honest trading that we need to be extra wary of.