help me im in a real muddle-firstplus/ppi

foolishme

ok here goes
i have read as many posts as possible to see if i didnt have to bother anyone but i seem to have got myself so muddled up.

in sept 06 took out secured loan for 20000 with firstplus(hadnt stumbled on this site at this time!!!)
then i was sucked into ppi for 3986 (if any1 is interested i had told them already that this was more than likely a short-term loan as i would be re-mortgaging in the nx year but they told me how this was a kind of way of saving cuz id receive my money back after 5 yrs, no word of interest been added or the partial pre-payment.dont think its a case of mis-selling tho)
anyhow back to my muddle-
so i needed the money asap and was under right to buy 3yr where u cant lend on house.
now tht has come to an end and i have been accepted for further advance for money.
got final settlement from firstplus and its 22919.59.
the advisor??? on the end of the phone mentioned something about paying off all but 5000 then it would cut interest and also allow me for my repayment of ppi.
shall i pay up and run or do this 5000 thing? dnt really understand it tho.

Rafter

foolish,

Don't beat yourself up about this.

You have been caught out by something called 'single premium' insurance.

Firstplus added the £3986 up front to your loan and will have been charging you interest on this. As a result you know over even more than you initially borrowed because the refund terms on the insurance are stacked in favour of firstplus. Although the premium refund after 5 years sounds attractive, if this was a 10 year loan, the interest you would have paid on the premium would amount to £1,250 assuming an interest rate of 8%.

So this fantastic savings account they sold you gives you £3,986 in 5 years time but has cost you £5,236!!!!!

I suggest you do the following.

File a 'misselling' complaint on the grounds that you told FP that the loan could be repaid early and therefore you were misadvised that taking this insurance would be a good idea. Also that you were told that it was a kind of savings, but were not told it would cost you £1250 in interest as a result.

If that fails for some reason, you then need to decide whether to keep the FP loan for 5 years to get your premium back or whether to pay the £22,920 and walk away. This decision will all depend on the interest on your loan and your mortgage and how much you are paying each month to FP.


Good luck.

R.

foolishme

thx rafter

tht was my first post, felt like a new kid at school!!!!!

i will try with the miselling complaint. does it matter if i still pay up total amount though, can i pursue it still.

my mortgate is fixed at 5% for 2 yrs, firstplus was 9.9% so i will def be payin off them.

last thing now,if the misselling doesnt !!! thru,should i leave a small amount in FP to cover myself to get back that payment or am i just killing time and money???