Secured Loan Early Settlement

DJP_2

12 months a go we took a £28,500 loan out , which we also took out insurance on to run along side it. (insurance premium total £7000)

We have just asked the loan company for an early repayment figure and they have told us it will be £34,500.

They are giving us £1000 rebate on the insurance policy.

Its in their terms & conditions that upon early settlement we are entitled to a 'partial rebate' on the insurance policy.

In light of the recent 'Bank Charges they are unlawful' subject , i am now thinking ... surely this can not be right , that we have to pay £6000 of an insurance policy ( money that we have not even borrowed in the first place) against a loan we are settling.


Hope this makes sense , can anyone shed any light as to wether we could have a case to argue .

Many thanks in advance

Xbigman

If the insurance was added to the loan then you did borrow it. The fact is that you have not used insurance that you contracted for, so only qualify for a partial rebate.

If you want to try and get more back you would need to have a reason for doing so, such as miss selling. Are you self employed or otherwise not likely to be able to claim on the insurance? Did you tell them you might be in a position to pay it off early? Or did you tell them you didn't want insurance but it got added on anyway? Any of those could be grounds for miss selling.
Regards


X

DJP_2

Xbigman wrote:

If the insurance was added to the loan then you did borrow it. The fact is that you have not used insurance that you contracted for, so only qualify for a partial rebate.

If you want to try and get more back you would need to have a reason for doing so, such as miss selling. Are you self employed or otherwise not likely to be able to claim on the insurance? Did you tell them you might be in a position to pay it off early? Or did you tell them you didn't want insurance but it got added on anyway? Any of those could be grounds for miss selling.
Regards


X

Yes i see now , i've looked at the policy and see that the insurance is added to the loan. (we did ask for insurance) I'm employed not self-employed , as for miss selling , then the telephone coversation during the application certainly made it sound very different but without actually giving me false information , so don't know how i could put that forward as 'miss selling' ?

Their valuation of a 'partial rebate' seems very unfair , £1000 out of £7000 , i'm just wandering how to go about appealing to get a bit more of this insurance money back , i could write a letter but i expect that would not get me very far ... is there an organization that could argue this for me , without costing me any money ??

Many thanks in advance.

Robert_Sterling

You borrowed £35,500
It looks as if you did not pay anything back.
Now you wish to redeem the loan.
You say that they are rebating £1000 of the insurance
You have to payback £34,500
So you do not appear to have to pay any interest.

On the other hand the cost of borrowing £35,500 for one year all things considered seems to be very high in deed.

Good luck with your attempt to get it reduced.

Rafter

Certainly wouldn't hurt to complain to them asking for a response within 14 days and say you will be referring the matter to the insurance ombudsman if you don't get a satisfactory answer. That alone will cost them so they may improve their offer.

Arguments you might use are:

1. Standalone insurance would have been a fraction of the price and payable in installments not up front (with interest and nasty repayment terms)

2. How can they justify rebating just £1000 of the insurance when the majority of the loan and therefore risk is therefore still outstanding?

3. Were you specifically advised on taking out the loan what the 'partial refund' of insurance might be if you settled early, and if you had been advised would you have had second thoughts about whether to take it or not.

Hopefully this kind of policy will be outlawed by the OFT review of payment protection insurance which is due soon. However it is highly unlikely that this will apply retrospectively so you are still worth progressing your complaint.

Good luck.

R.

regularsaver1

This sounds to me that it is more to do with the front loaded interest of the loan? - and then the insurance also

ask for a breakdown