Forved into a high rate loan - is this legal?

nobby71

Hi

Have recently been in a financial nightmare, where we were £2500 overdrawn against an agreed limit of £2000 on our main account and £500 overdrawn against an agreed limit of £100 on our second account.

The bank (HSBC) rang us an asked us if we could pay extra into the account (including using a credit card to do so!!!!) or they may freeze the account incuring more costs. We arranged a meeting with the bank and the only way out we were offered was one of there loans at 14% apr. We were also told we must do it on the day otherwise they may have to start refusing Direct debits etc.

Are the bank within there rights to do this as we could have arranged a cheaper loan on the internet??? If not can we get out of this or who do we complain to?

Any help would be appreciated.

Cheers
nobby71

tom188

The bank (HSBC) rang us an asked us if we could pay extra into the account (including using a credit card to do so!!!!) or they may freeze the account incuring more costs.

Are the bank within there rights to do this as we could have arranged a cheaper loan on the internet???

Surely the first quote shows that they are giving an option to go looking. Sounds like you ignored it and went straight to the bank.

Is your credit record shot or can you not get another loan to pay off the HSBC one now?

Overdrafts are repayable on demand so they are quite within their rights to ask for all the money you owe them back at any time.

nobby71

tom188 wrote:

Surely the first quote shows that they are giving an option to go looking. Sounds like you ignored it and went straight to the bank.

Is your credit record shot or can you not get another loan to pay off the HSBC one now?

Overdrafts are repayable on demand so they are quite within their rights to ask for all the money you owe them back at any time.

We were worried sick and were in a situation where we didnt have enough disposable income to take on another loan (mainly due to £125 exceeding overdraft fees per month (which i am currently chasing up)). So we went to see the bank to discuss options - not expecting to be forced into a loan there and then or else.... etc

So no nothing was ignored. Our credit record is not shot but to take another loan will surely incure a larger loan (due to interest) and therefore cost the same per month anyway??????????

Thoughts?

tom188

Presumably you are making repayments and being charged the current rate of 14% APR. Therefore if you successfully applied for a lower rate loan you would use this loan to repay the existing loan. You would then be charged less interest on the same borrowing. If you are x years through an n year term, it would be advisible to get a n-x year loan as extending the loan will cost you more.

Make sure you see if there are any redemption penalities on the existing loan.

Bare in mind that although 14% seems high for small amounts of borrowing such as this it is fairly average. The headline rates you see are generally larger amounts.

nobby71

Thanks

Will work it out, check it out and hopefully cut my payments.

Once again thanks for the advice.

Nobby71