Santander Loan

pigsmightfly

Hi,

Just wondered if someone could explain something to me please

I have a loan that was previously with Cahoot but got passed over to Santander. They have recently agreed to put me on reduced payments whilst I am on maternity leave but emailed me the below:

"Your contracted monthly installment is £XXX, therefore as you are now underpaying, arrears will start to accrue at a value of £XXX per month. This will be reflected on your credit file each month. Interest is unaffected by the arrears on your account."

I understand this means I am still being charged interest so I emailed them to ask them to consider reviewing the interest rate due to my current financial situation and got the below reply:

The interest on the fixed rate loan account is not calculated daily. The interest element of the loan is calculated at the outset and incorporated into the total amount repayable. For this reason we are unable to "freeze" interest.

What we have been able to agree to within collections and recoveries is accept a reduction in the amount you pay each month to stop default registering, but we are unable to change the amount of the monthly instalment which is why arrears will start to accrue.

If you want further information, please approach the consumer credit counselling service for advice rather than us.

Can anyone explain in simple terms for me (:o) what this actually means as I'm not sure if interest is or isn't been charged now? Also, surely I would contact that other place for advice on being in debt etc. which I don't feel I need to as I have everything in hand at the moment, but not for direct information relating to my account?? Are they just trying to fob me off a bit?

Does anyone have any advice on what/if I should reply to them?

Thanks

YorkshireBoy

pigsmightfly wrote: »

I emailed them to ask them to consider reviewing the interest rate due to my current financial situation

I have everything in hand at the moment

There appears to be a contradiction here?

The way I read it is that they're happy to accept alternative arrangements in the short term, but will mark your credit file each month with an 'arrangement to pay' (AP) marker.

This will trash your credit file for some time to come so should be avoided if at all possible.

pigsmightfly

Yeah I'm totally confused as to what it means and if I'm paying interest or not- no idea :huh:

Unfortunately I can't avoid the payment arrangement at the moment as I have no income now

CHR15

It would help if you said what £xxx was.

If your payments are £200 a Month but you are only paying £100, your arrears will grow at a rate of £100 a month (without additional interest on that £100)... but I'm guessing as we don't know the figures.

lindens

It sounds like the loan had the interest front loaded when you took it out, so whatever you do now, the amount of interest you pay will never change. In the situtation you are currently in that sounds like good news.However if you wanted to pay it off in full early, you would save no money as you would pay the same amount of interest.

They have accepted reduced payments, but on their records they are not changing/reducing the monthly payment amount so it "looks" like you are in arrears. However, as they have an agreement with you , even though your account "looks" like you are in arrears their collections department will not chase you.

Because you are not making the correct monthly payments, your credit file will reflect this and it will show as you defaulting ( which you have really, just with the agreement of the lender) This will affect any future borrowing for some years to come.

pigsmightfly

lindens wrote: »

It sounds like the loan had the interest front loaded when you took it out, so whatever you do now, the amount of interest you pay will never change. In the situtation you are currently in that sounds like good news.However if you wanted to pay it off in full early, you would save no money as you would pay the same amount of interest.

They have accepted reduced payments, but on their records they are not changing/reducing the monthly payment amount so it "looks" like you are in arrears. However, as they have an agreement with you , even though your account "looks" like you are in arrears their collections department will not chase you.

Because you are not making the correct monthly payments, your credit file will reflect this and it will show as you defaulting ( which you have really, just with the agreement of the lender) This will affect any future borrowing for some years to come.

Thank you, that's made it more clear to me. Sometimes just need it in different wording