Have I been mis-lead in to loan?

opinions4u

murphy1315 wrote: »

@ 3/4 term 10K
@ 1/2 term 7.2K
@ 1/4 term 3.9K

i borrowed in june/july

Ok, so repaying after 7 months it was likely that you would have to pay somewhere between the £12k you borrowed and the £10k figure quoted above that would be due at 15 months. The settlement figure you tell us you've been quoted is £11k. Right in the middle. So have they misled you, or have you simply misunderstood the information on your agreement.

While you haven't told us what your payment is (despite my request) your interest charge is nearly 1% a month. I'm assuming your monthly payment is around £260.

This means your debt starts at £12k, goes up by £120 a month for interest (reducing by around £1.70 a month as the debt reduces) and then reduces by £260 for your monthly payment.



6 monthly payments in (July > Jan) I'd expect you to owe about £11,000 at this point in time. Work it out month by month for yourself and it should make sense to you.

I can't see why you would expect the settlement figure to be lower.

redpete

murphy1315 wrote: »

the only reason i feel misled is the fact I bleive I wasnt fully explained that the interest was applied all at once.
...
I would like to be certain that I havnt been misled into an agreement that I could of found an alternative!

It seems the only bit of misleading was the person on the phone explaining that your interest was "added at the beginning of the loan" when they should have explained that the monthly payments were worked out on the basis of you having the loan for the full term. CLAPTON and Brock explained this several notes back.

murphy1315

opinions4u wrote: »

This means your debt starts at £12k, goes up by £120 a month for interest (reducing by around £1.70 a month as the debt reduces) and then reduces by £260 for your monthly payment.

You are correct the repayment is £260.80 p/m
I have paid 9 payments

opinions4u

murphy1315 wrote: »

I have paid 9 payments

Are you sure?

i borrowed in june/july

I'd reckon 6 or 7 from that.

murphy1315

opinions4u wrote: »

Are you sure?

I'd reckon 6 or 7 from that.

Sorry it will be the 9th payment on 1st FEB

First payment was 1st JUN 10

Hanky_Panky

CLAPTON wrote: »

No loans have interest front loaded

Really ??
Is this a relatively new development ?
How long has it been since pre-computed personal loans have been offered then ?

Thanks

CLAPTON

Hanky_Panky wrote: »

Really ??
Is this a relatively new development ?
How long has it been since pre-computed personal loans have been offered then ?

Thanks

the rules for unsecured personal loans changed in 2007 (as I remember) that determined the way settlement figures were calculated
there are further changes due in frb to do with partial (over) payments too

I've no idea what a 'pre-computed' loan is

Hanky_Panky

CLAPTON wrote: »

the rules for unsecured personal loans changed in 2007 (as I remember) that determined the way settlement figures were calculated
there are further changes due in frb to do with partial (over) payments too

I've no idea what a 'pre-computed' loan is

Pre-computed meant all interest added on at the start to create total balance then divided by number of payments; 36, 48 etc.

So I understand about the Rule of 78 change for settlement figures but what has that got to do with front loading interest at the application stage please.

Niksan

My loan with Lloyds is pre-computed (same as front loading?) with a total balance I can see that will need to be payed should I allow full term, and in big letters above says this isn't a final payment figure and should call for one, which is usually lower than the figure displayed due to them having to deduct interest, but add any penalties. Is there any reason for it not to be if it's a fixed rate over the term as the number would be the same anyway unless it could influence figures if you miss a payment for example.

I find it more useful this way as it will tell you the worse case on what you will have to pay rather than having to work it all out with time remaining and what you have left plus the rates.

Hanky_Panky

Niksan

I believed most loans were worked out that way so was surprised by Clapton's comment but really interested to know if things have changed.