Interest Rip off due to early repayment

jeffs690

Hi, Can anyone give me some advice because I'm getting ripped off with repayments on my loan. I took out a halifax loan for £14000 in July 09 with an APR of 19.2%.

Last year I repaid £7000 early. The balance on my account is £5000 yet this month I paid £185 interest. This interest amount of interest should be on a balance of over £11500. When I've spoken to the bank they said that the interest payments are set and won't change even though the balance is lower than what it should have been.

On my loan agreement it states - 'we charge interest at the monthly interest rate on the balance of your loan amount on the day before your payment date in each month'. SO from this it looks like I'm being ripped off - can anyone help or point me in the right direction please.

CLAPTON

what does it say about overpayments and how they affect interest

how do you know that you were charged 185 in interest.. does it say that on your statement

jeffs690

I've got no information on the overpayment's, i would have thought that the statement of how they worked the interest payment would have been enough.
I only know about the interest because I rang them today and queried it as I'm trying to pay it off quickly.

real1314

What was the length of the loan?

What were the monthly payments originally set as?

jeffs690

It was a 7 year loan and worked out at £300 per month

kaya

"On my loan agreement it states - 'we charge interest at the monthly interest rate on the balance of your loan amount on the day before your payment date in each month'. SO from this it looks like I'm being ripped off - can anyone help or point me in the right direction please. "

this states how they calculate the interest , they can calculate it all before you repay a penny, doesnt say that reducing the principal sum will make any difference , i can see how its confusing though, you need to sit down with a cuppa and read ALL of the small print

E.T.A are the repayments monthly or four weekly?

CLAPTON

are you absolutely sure there is nothing mentioned about overpayments

I would try to get an up to date statement in writing to see exactly what the situation is.

do you have a revised completion date?

jeffs690

Repayed monthly, thanks for that I'll dig out the paperwork. If thats the case that is cheeky!

jeffs690

just read the conditions and it sounds like I'm over a barrel! It says - if you pay more thanone payment in any month this will not reduce the total charge for credit you have to pay. This condition means that you will not get any benifit from early repaymentor a part repayment or making larger payments than your monthly payment'

I think this means I got shafted!

opinions4u

Halifax loans taken out prior to a certain date in 2009 (sorry, but I don't know exactly which date) charged interest assuming no overpayments had been made.

While this would have meant repaying the loan earlier, you would only have saved interest that would have been charged in those later years (in other words when the debt was smaller and as such the interest too).

Since the changeover they have adopted the Lloyds TSB model which allows overpayments and reduces the interest charged accordingly.

Scam? Rip off? Or just the terms and conditions that you had a booklet explaining.

ashleypride

jeffs690 wrote: »

just read the conditions and it sounds like I'm over a barrel! It says - if you pay more thanone payment in any month this will not reduce the total charge for credit you have to pay. This condition means that you will not get any benifit from early repaymentor a part repayment or making larger payments than your monthly payment'

I think this means I got shafted!

Why are you only now reading the T&Cs? A mortgage is one of the biggest commitments in life, you need to completely understand the T&Cs of have advice from a IFA. Different mortgages have different overpayment terms and therfore charge different interest rates because of this.