Have I been mis-lead in to loan?

murphy1315

but this still beggers the question
Should Tesco have been more open with me when I applied for the loan in the first place?

ILW

murphy1315 wrote: »

but this still beggers the question
Should Tesco have been more open with me when I applied for the loan in the first place?

Not unless you asked.

telboyo

murphy1315 wrote: »

but this still beggers the question
Should Tesco have been more open with me when I applied for the loan in the first place?

Perhaps you should have been more open with them and told them you wanted a payment breal at the start of the loan.

murphy1315

telboyo wrote: »

Perhaps you should have been more open with them and told them you wanted a payment breal at the start of the loan.

I had trouble in the beginning with them the contract says 1st payment would be taken 1 month after loan issued
I got the loan around the 17th May
They took the first payment 1st June!
When I complained they said they agreed the paperwork was wrong and gave me 1000 clubcard points to say sorry. Whoop whoop.
I think there customer service department has a lot to answer for?!

Hanky_Panky

Shameless bump.

Still interested to know when loans stopped having interest front loaded - Clapton ?

Hanky_Panky

CLAPTON wrote: »

No loans have interest front loaded
all loans simply charge the monthly interest as you go along
early settlement can include up to 2 months interest in addition to the capital sum remaining

however the information can be presented in two ways

a. by adding the capital plus all the interest and then saying you get a rebate for early setttlement
b. by quoting the capital remaining and add a max of 2 months interest

It's often the case that the call centre staff don't have access to the settlement figures on their screens.. so you need to ask for a written settlement figure
It's normal for most bank staff to not understand loans, APR, interest or the CCA loan rules

Although interest is not front loaded, nevertheless, as the monthly interest payable is calculated on how much is still owing, obviously in the early months of a loan you pay a lot of interest because you still owe a lot
so after 9 months of payments on a 60 month loan you will only have paid just over a 1,000 off the capital, the rest of your 2,347 would have been the interest.

Your agreement shows the early settlement figure for 15, 30, 45 months settlement

In the absence of any evidence to the contrary I think we can assume that this post is inaccurate and that the information given to the op by the lender was in fact correct.

In a nutshell many loans do have front loaded interest - however please don't take my word for it. If anyone is in any doubt about their own loan then check the loan documents given to you - does it list amount borrowed + interest + any further charges (and possibly interest again) then divide that by your agreed term i.e 36, 48 months etc. If this is the case then you have a front loaded interest loan. But again please check with your lender if in any doubt.

This highlights one of the problems with this site: many people with lots of posts and thanks are often perceived as being knowledgeable when they aren't.

opinions4u

Hanky_Panky wrote: »

In the absence of any evidence to the contrary I think we can assume that this post is inaccurate and that the information given to the op by the lender was in fact correct.

In a nutshell many loans do have front loaded interest - however please don't take my word for it. If anyone is in any doubt about their own loan then check the loan documents given to you - does it list amount borrowed + interest + any further charges (and possibly interest again) then divide that by your agreed term i.e 36, 48 months etc. If this is the case then you have a front loaded interest loan. But again please check with your lender if in any doubt.

This highlights one of the problems with this site: many people with lots of posts and thanks are often perceived as being knowledgeable when they aren't.

Of course, Clapton is one of the best informed posters on this forum.

A lender can quote a total amount payable and rebate back from that for early settlement.

A lender can also calculate interest daily or monthly - which will be more interest early on as the debt is higher - and the charge a penalty (e.g. interest up to the end of the current month) for early settlement.

The outcome can be exactly the same settlement figure.

Front loading is a misnomer. The OP, 8 months in, got a settlement figure of somewhere between the amount borrowed and the settlement figure promised after 15 months. It's fair. Equitable. Just misunderstood by the borrower.

ViolaLass

Hanky_Panky wrote: »

In a nutshell many loans do have front loaded interest - however please don't take my word for it. If anyone is in any doubt about their own loan then check the loan documents given to you - does it list amount borrowed + interest + any further charges (and possibly interest again) then divide that by your agreed term i.e 36, 48 months etc. If this is the case then you have a front loaded interest loan. But again please check with your lender if in any doubt.

If the loan were truly front loaded, there would be no rebate for early settlement. Adding to capital to interest and charges and dividing by the number of months to get the monthly payment does not necessarily mean that the loan has been front loaded. This calculation is used to work out mortgage payments but most mortgages are not front loaded.

redpete

Hanky_Panky wrote: »

In a nutshell many loans do have front loaded interest - however please don't take my word for it. If anyone is in any doubt about their own loan then check the loan documents given to you - does it list amount borrowed + interest + any further charges (and possibly interest again) then divide that by your agreed term i.e 36, 48 months etc. If this is the case then you have a front loaded interest loan.

The problem is that "front loading" is used to describe two entirely different things.

For most loans you have the monthly repayments calculated to be the same over the life of the loan. Each month that month's interest is added to the loan, your monthly repayment pays off this interest with any balance coming off the capital. This obviously means that the proportion of the repayment due to interest is much higher at the beginning of the loan.

The "Front-loading" that CLAPTON was referring to is the less common case where the interest for the whole period (or often PPI for the whole period) is added to the loan at the beginning and you have to repay the total amount regardless of when you pay it off.

Hanky_Panky

All of the above posts pretty much confirm that it is entirely possible for the loan to be as I originally referred to it 'pre-computed'. The fact that Clapton didn't even know what this term means indicates to me that he isn't as well informed as is being claimed. In addition I did ask him/her to confirm 3 times how he could make his claim 'No loans have interest front loaded'. As we now know and the whole point of my post - this is nonsense. He/she further compounded the error by referring to changes in legislation regarding settlements - still one of the best informed posters on here ?

ViolaLass - I think you need to re-read your post. Not a lot makes sense. A mortgage is one of the products that would not/could not be front loaded. Also a 'pre-computed' loan absolutely has to have a rebate as all the interest has been added at the start.

redpete - my experience would suggest that loans with interest added at the start are more commen than where interest is calculated monthly. This is exactly the point I asked Clapton to prove - have things changed in the legislation with regard to pre-computed loans ?