Lloyds tsb loan

natalie82_2

My husband took out a 5k loan from LLoydsTsb back in Oct 2005. his original payments were for £150 per month, however, he was unable to afford to keep paying this, therefore he requested to lower the payments to £75 per month. He has been paying this amount ever since (for 5years) and he has just recently checked the outstanding balance. Despite paying £900 a year for 5 years he still owes approx 3k. we cant see this loan ever ending and it feels like nothing is being paid off apart from high interest rates. has anyone any advice on what my husband could do to pay this off and become loan free?

Sparx

Help him pay it off..?

natalie82_2

its difficult to explain but this isn't something i am prepared to do as he has always struggled to manage his money and has always had debt which i have sorted out for him. he has been bailed out so many times in the past by his family and i feel as though he just spends his money without thinking of the consequences and then leaves it to someone else to stress over. i am the complete opposite to him when it comes to money and i budget and save best i can. i have helped him pay off so much in the past and helped him buget his money however, he just doesnt take any responsibility. which is why i wanted to see if there was a way of reducing the amount of interest he is paying, so he canpay it off himself!

natalie82_2

oh and the loan was taken out in 2003 not 2005 so in total he has paid £900 a year for 7 years, totalling £6,300 and actually only cleared £2,000

VincentVega

You should contact the bank and find out exactly what his £75 per month payment is going towards. If it's paying off £60 worth of interest (hypothetical figure) and only £15 worth of the original loan, then it's not too surprising. The bank may change the interest amount for you, but they've already done it once, so may not feel like doing so again (especially as they seem to be making plenty of money as it is from him).

Unfortunately, £75 per month isn't a huge deal, so the best thing he can do is to increase his monthly payment. The best thing you and the rest of the family can do is to stop bailing him out. He won't learn if you're always there as a last resort; he needs to be aware of the consequences of spending without thinking. I was fairly umm... profligate with my spending for a fair while, and suffered for years as a consequence. I didn't have anyone to tell me I was being stupid, I had to learn that myself.

If you can get him to understand that you won't back him up any more, and get him to try to cut down on unnecessary spending and pay back more every month, then you'll be able to pay it off quicker and get this millstone off your back.

CHR15

I agree with vincentvega, by dropping the payments by such a huge amount, he would have been barely clearing the interest each month.

There are lots of instances where people have dropped the repayments to LESS than the interest accruing each Month. This means the debt is going UP each Month despite the repayments.

I vote to leave him to sort it out himself, bail him out once and he will never learn. He needs to increase his repayments, you can't clear a debt by chucking peanuts at it.

KingElvis

Get a settlement figure from the bank and if you can get it, get a super balance transfer card and pay it off at 0% (minus the fee of course)

redpete

If those numbers are correct (did he reduce the monthly paymnent straight away, or was he paying £150 a month for 2 years and £75 since then?) I reckon the interest rate must be about 14.6%.

If he keeps paying at the current amount he will clear the loan in about 4.5 years time.

At the beginning he would have been paying off only £15 a month off the capital, the rest woul have been against interest. At the moment it would be £36 for interest and £39 off the capital, so it is getting better.

If he can increase the payments to £100 then he will be clear in 3 years.

As for reducing the interest rate... The lender has no reason to reduce it. If he has a bad credit record as implied he might struggle to get a low % CC that will allow balance transfers.