Help - Is there a 'cooling off period' with loans?

katybliss

My boyfriend is not the most money savvy and he has had a Lloyds credit card with £3700 balance that he has just been paying the interest off on and none of the balance. Today he has been into his bank - also Lloyds and they have convinced him to take out a loan of £3700 to pay off the balance. This did not seem like to bad a suggestion to me but he has said that he will be paying £93 per month over 5 years making the total payment £5580 by my reckoning.

I am sure there must be better value loans out there that he could get but he said that he has signed everything and that they have payed off the credit card already.

Does anyone know if there is any cooling off period or get out clauses with loans in this situation??

grumbler

katybliss wrote:

Does anyone know if there is any cooling off period or get out clauses with loans in this situation??

No, unless it is specified in the Credit Agreement.
Cooling off period is only for distance selling, not for the contract signed face-to-face in the bank's office.

AMILLIONDOLLARS

sounds like he's been done by his bank! I know this is after the event, but maybe he could have applied for an M&S Morethan Card which is 3.9% for the Life of the balance, I am sure he could have saved himself a lot of money. Its done now. I would advise him to change banks, Lloyds did not have his interests at heart. No pun intended!!

Astaroth

My understanding was that there was a 10 day cooling off period for loans but I may be wrong (as Consumer Credit Act 1995)

http://www.moneyextra.com/dictionary/cooling-off-period-004050.html

mrcow

You are right! He can do better.

This is the equivalent of 19% apr over 5 years! (He'd probably be better off keeping the cc!)

Get him to show you the paperwork today! Check out the t&cs. Check the APR. Check if there is any PPI thrown in for good measure. Check out the cancellaton terms.

Any cancellation terms will be on the paperwork.

grumbler

Astaroth wrote:

My understanding was that there was a 10 day cooling off period for loans but I may be wrong (as Consumer Credit Act 1995)

http://www.moneyextra.com/dictionary/cooling-off-period-004050.html

Hmm... I am not an expert and don't know whom to believe now. Has anything changed in 1995 (as compared with 1974)?

Certain agreements can be cancelled

Under the Consumer Credit Act 1974, certain credit agreements can be cancelled provided there were face-to-face negotiations before the agreement (the place where these took place is immaterial) and you didn't sign the agreement on the trade premises of the creditor or supplier (for example, you signed at home or in your office).
However, you don't have long to cancel because the cancellation period ends five days after you receive the second copy of the agreement, which the creditor is obliged to send you. You must cancel in writing.
Where goods are bought on credit at a distance (for example, over the internet) you have a right to cancel under the Consumer Protection (Distance Selling) Regulations 2002. This cancellation period lasts at least seven days after the day on which you receive the goods, but could be longer. If you cancel under these regulations, any related credit agreement would be automatically cancelled too.

http://www.bbc.co.uk/consumer/your_rights/credit.shtml

Consumer credit agreements

Always read the forms before you sign. If you don't understand them get help from a trading standards office or Citizens' Advice. Once you sign you can't change your mind - unless you sign at home or at some other non-business premises.
However, the Consumer Credit Act allows you to withdraw from the agreement before the creditor signs it. The time period is very short and once the creditor has signed the agreement it becomes 'executed' and you cannot then withdraw. To withdraw from a prospective agreement you must contact the finance company or their broker and inform them of your intention to withdraw. This can be done by telephone but always back it up with a letter confirming the withdrawal.

http://www.consumerdirect.gov.uk/your-rights/fs_c01.shtml

katybliss

Thanks for all the replies. I definitely think he's been conned by Lloyds, he thought the bank were trying to help him but my opinion is that they will only ever try to help themselves!

I have looked at the paperwork (which he signed there and then unfortunately!) and it seems that the loan can be paid off in full at anytime with no actual penalty, probably just that months interest so what I'm going to look into doing is getting a much better loan rate and paying the Lloyds one off with that and hopefully saving a packet of interest in the process.

I'm a newbie to this site so I appreciate all the helpfull responses :T

mrcow

So has he signed up for PPI too?

Or was the loan actually at 19% apr?

billywhizz

Check with the bank, they may be willing to cancel the loan if he has only just taken it out for perhaps a small fee.

Astaroth

grumbler wrote:

Hmm... I am not an expert and don't know whom to believe now. Has anything changed in 1995 (as compared with 1974)?

Not an expert either but the bill was enacted in 1974 and then amendments were made to parts in 1995

katybliss

He managed not to sign for PPI as well, he's just been shafted with a particularly rubbish interest rate!