Asked to turn O/D into Loan to get rid - now huge charges

medion

Our son wanted to get rid of his overdraft and was in contact with the RBS who said they could turn it into a loan and he could repay if monthly. ON checking through his account the arranged monthly payment has been going through for nearly a year but half of the agreed monthly payment is being taken back as a bank charge for 'interest'. On checking the outstanding balance it has barely reduced at all. As he was advised that this would be the better option does he have any comeback? He would have been better just repaying money on the account itself every month to reduce the OD but was advised against it. He contacted the bank in good faith hoping for honest advice!

Any suggestions most appreciated.

ironlady2022

Sometimes a loan can be cheaper and more manageable. A loan is better if you have a large amount rather than a smaller sum. The bank will have gone through the details with him. I don't think you have a comeback here

CLAPTON

what are the details
amount of loan
apr
monthly repayments
number of repayments

vaporate

I doubt there is much you can do.

He no doubt signed the loan agreement form without realising the cost difference over a longer period.

noh

If there is a charge for interest shown on his current account statement as well as the loan payments then he still has an overdraft in addition to the loan.

Loughton_Monkey

noh wrote: »

If there is a charge for interest shown on his current account statement as well as the loan payments then he still has an overdraft in addition to the loan.

Agreed that this is probably the reason.

Overdrafts are very expensive ways of borrowing money. When transferred to a loan, then the current account would show no charges whatsoever - but obviously there would be some sort of Direct Debit or transfer into the seperate new loan account.

It all points to bad financial management. In other words he probably transfeered the O/D into a loan and then simply allowed the Current Account to get back into Overdraft.