MSE News: The credit card and loan shake-up: what it means for you

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"EU rules mean fewer borrowers will get the best rates but regulations also give greater flexibility when clearing a loan ..."

Read the full story:

The credit card and loan shake-up: what it means for you

nzseries1

I'd love to know who's policing this bit, and how:

Only 51% will get the rate lenders brag about

I mean, the only people who know what percentage of people get what APR is the bank staff. Who's to stop them advertising a low APR, and then giving it to nobody?

Tixy

nzseries1 wrote: »

I'd love to know who's policing this bit, and how:



I mean, the only people who know what percentage of people get what APR is the bank staff. Who's to stop them advertising a low APR, and then giving it to nobody?

FSA through their audits and the regulatory reporting the banks complete for them. Just the same as when it was 66%. It should mean that more people will be offered loans albeit at a higher APR rather than just being turned down.

Personally I think the good points of the changes out weigh the bad.

manc

Can I ask- with regards to the new loan repayment rules...

Last week on my payday I called HSBC to pay off my loan early. I had 3 payments left (including my usual monthly payment the next day) - so I wanted to make two extra months payments to get my loan finally paid and out of the way.

They told me I couldn't - and I should just put my spare cash in a savings account!

If I were to call and ask them to pay it off now - they would have to let me? (Albeit with a 0.5% charge?- Approx £1 on the the overpayment now!)

Have had the loan for 5 years and just want to get the last couple of months out the way so I am not tempted to just spend the spare money I have which could go towards paying it off a couple of months early. It's mainly the significance in my head of finally paying it off I want!

nzseries1

manc wrote: »

If I were to call and ask them to pay it off now - they would have to let me? (Albeit with a 0.5% charge?- Approx £1 on the the overpayment now!)

According to that news article, yes, since the new rules came into force today!

I would bet though, that the advisor you talk to will know nothing of the new rules.

jamesd

How do these loan rules apply to multiple loans with individual loan agreements and a combined contract? For example, I have loans with some 600 individual lenders, at different interest rates, some lending with consumer credit licenses, some not. Can the administrator of the loans decline to accept early settlement of the individual loans, in most expensive to least expensive order?

corbyboy

Just a question about this:

Card companies have always been able to demand you repay in full whenever they want – now they must give two months' notice rather than a week. But that still means you could be asked to repay your plastic debt at short notice.

Is this true? I know card companies can essentially freeze your account and stop you borrowing. But they can't make you pay back more than the minimum payment can they?

Joe_Bloggs

@Jamesd according to this the act is not retrospective. If you need to borrow money from 600 lenders I suggest you view one of those digital TV channels that seem to be sponsored by debt consolidation scams/schemes.
J_B. (In jest).

Tixy

corbyboy wrote: »

Just a question about this:

Is this true? I know card companies can essentially freeze your account and stop you borrowing. But they can't make you pay back more than the minimum payment can they?

Yes, they can end the agreement and ask you to repay the debt in full. If you don't or can't pay back the balance they could then move to debt collection procedures, put a default on your credit file etc.
The T&Cs do seem to vary quite a bit on this point, quite a few already say they will usually give you two months notice except in exceptional circumstances (such as repeatedly breaking the T&C).

jamesd

Joe_Bloggs, thanks, shame it doesn't cover existing agreements, still wonder how it applies to new ones. Social lenders typically have lots of lenders per borrower at different rates.

Joe_Bloggs

@Jamesd
when you say lots of lenders per borrower are you referring to Zopa
and similar if there are others ? I suspect that all new documentation should have been scrutinized for compliance with the new regulations by fully qualified legal brains. If not then it's is down to the courts and an 'expensive' for all.
J_B.