Current loan with The AA

bigwody123

Hi all

This is my first post and was wondering if anyone could help me or offer me some advice.
I took out an unsecured personal loan with the AA in 2007 to pay off my other debts. This was a big loan of £25000 and i was under the impression that i would be paying it off over 7 years (that's what i asked for) however i have just received an annual statement through the door and it says my repayment term is actually 10 years! I have checked all my previous statements and they all have 120 months for repayment yet when i applied i asked for 7 and have checked the website and they only do a maximum lending term of 7 years so im confused. Would this make the debt invalid if they have put me on something i didn't want or mis sold me. Would i be able to reclaim any money back? I have paid £372 a month for this for 3 years without anybreaks and i was looking at settling the debt with another loan if possible but they say i still owe £21500 yet ive paid £12000 in repayments does this seem right? I have an APR of 12.95%
Any advice would be fantastic.

Sorry for the long post but i thought as much detail as possible might get more people to respond.

Thanks

ILW

What evidence do you have regarding the 7 year term?

CLAPTON

if you have a contract that says 7 years then I would think you would have a reasonable prospect of getting them to stick to that

otherwise 21,500 would be reasonable as a settlement figure after 36 payment

bigwody123

I have asked them to send me a copy of the original documents i signed for the evidence but i was certain at the time of applying that the maximum lending term was 7 years anyway. I have since looked on the aa website and for a loan of 25 years the maximum term you can lend over is 7 years.
The aa must make you pay off the interest first before you pay the capital off as this is the only way i can think of as to why i have only paid off £3500 of the £25000 i originally borrowed when my total payments to date equate to £12000

CLAPTON

bigwody123 wrote: »

I have asked them to send me a copy of the original documents i signed for the evidence but i was certain at the time of applying that the maximum lending term was 7 years anyway. I have since looked on the aa website and for a loan of 25 years the maximum term you can lend over is 7 years.
The aa must make you pay off the interest first before you pay the capital off as this is the only way i can think of as to why i have only paid off £3500 of the £25000 i originally borrowed when my total payments to date equate to £12000

each of your monthly payments go as follows
-you pay the monthly interest first i.e. capital x 12.95%/12
-and the rest pays some capital back

obviously, as you owe more at the beginning of the loan then the interest per month is higher than near the end of the loan
it then gradually falls over time

exactly like a mortgage

bigwody123

Ok sounds about right then like you say. Cheers for that.
Clapton do you have any advice in reference to the term of the loan?

Cheers

Cash_Flow

bigwody123 wrote: »

Hi all

This is my first post and was wondering if anyone could help me or offer me some advice.
I took out an unsecured personal loan with the AA in 2007 to pay off my other debts. This was a big loan of £25000 and i was under the impression that i would be paying it off over 7 years (that's what i asked for) however i have just received an annual statement through the door and it says my repayment term is actually 10 years! I have checked all my previous statements and they all have 120 months for repayment yet when i applied i asked for 7 and have checked the website and they only do a maximum lending term of 7 years so im confused. Would this make the debt invalid if they have put me on something i didn't want or mis sold me. Would i be able to reclaim any money back? I have paid £372 a month for this for 3 years without anybreaks and i was looking at settling the debt with another loan if possible but they say i still owe £21500 yet ive paid £12000 in repayments does this seem right? I have an APR of 12.95%
Any advice would be fantastic.

Sorry for the long post but i thought as much detail as possible might get more people to respond.

Thanks

You have paid £13392.00 in the last 3 years.

If you pay the loan over the full term you will have paid back £44,600:eek:

Apples2

bigwody123 wrote: »

I have asked them to send me a copy of the original documents i signed for the evidence but i was certain at the time of applying that the maximum lending term was 7 years anyway.

What does your copy of the loan agreement say??

It sounds like this has been shouting 120 Months since the very start.

It may be that the AA have changed their max repayment periods since you took out the loan in 2007 so it is not likely you can use todays requirements for an old loan.

It did make my eyes water at paying over £44k but this must have been mentioned on the original agreement you signed (Total amount repayable).

bigwody123

Cash_Flow wrote: »

You have paid £13392.00 in the last 3 years.

If you pay the loan over the full term you will have paid back £44,600:eek:

Scary i know!!!:o

CLAPTON

bigwody123 wrote: »

Ok sounds about right then like you say. Cheers for that.
Clapton do you have any advice in reference to the term of the loan?

Cheers

given the amount borrowed, the apr and the monthly payment then it would indeed take 10 years to repay

it would take an apr of about 7% to repay in 7 years