Nemo Loans, Help please

kazemporium

Hi

Am hoping someone may be able to help. We took out a secured loan with Nemo in 2005, we cancelled the ppi as it was very high so have not had the same issue as everyone else with this.

Our issue is the amount of interest we have been paying, the loan we took out was for £30k and have been paying between 281 & 320.00 a month during the duration of this loan. Every month we make a payment and then every month they add interest which is for approx £15 less than the payment we have made.

The amount owing after 5yr is 28'844.06.. when we asked for a settlement figure it was just over £30'000 as they add on a fee to finish the loan.

We dont understand why they are adding this much interest on every month. Are they adding the interest on at the start of the loan and then there will be no interest for the latter years ? as if this continues there is no way the loan would be paid off at the end of the 20yr term.

We really want to settle this loan as this company is a total rip off.
Should we contact the finacial ombudsmen ? is it legal to add this amount of interest on every month ?

Apples2

What interest rate did you sign up to when you took the loan out??

If your payments are varying, maybe you are on a variable rate of interest.

It is normal to pay huge interest at the start, then as the term runs it's course, the interest you are paying reduces and the capital you are paying increases.

At the end of the loan, it is similar figures but your payment would be almost all capital and only £15 interest (in your example above)

kazemporium

The interest we are paying varies each month from £266 to £298 a month. For example this month we paid our direct debit payment of £320 but then they added on a monthly interest of £298 So we only actually paid £22 off the loan. This loan has been running 5yrs so thats a quarter of the loan in effect that should have been paid off but in 5yrs we have made 60 payments and paid off £166.00 off the loan, so if we settle the loan now we will pay them more than we borrowed. My mortgage has been running a shorter duration and we have paid off loads of that. Time to remortgage i think and add this money onto the mortgage at least it comes down each year.

coldstar

What is the term of the loan, the time you have to pay over?
Doing a rough calculation if I assume its over 25 years and your paying 320 a month on a capital sum of £30000 then your probably paying around 12.2% annual interest (probably a variable rate)

coldstar

Sorry, just spotted you said its a 20 year loan. If this is the case the annual interest is probably around 11.5%

kazemporium

Am not sure, i thought hubby said 20yrs but it could be 25yrs. i am waiting for him to go through the loan agreement. I just know how we are when looking at loans etc and i know for sure we were not desperate enough to take out a loan with large interest rates and we always planned to pay off the loan early so we would have checked this info before taking out a loan. Will add some ore info once i have the agreement. Thanks for your replies so far.