Early loan repayment -- advice needed!!!

gstir_2

Hi,

I am posting this on behalf of my Mum and Dad to get some advice for them.

They took out a bank of Scotland loan in September for £5,500. The first repayment on the loan was due to 18th November as the bank offer the payment holiday. They have today been in the fortunate place where they were able to pay this loan off.

On visiting the Branch, they were told that the settlement figure was £5836, which they paid. Does this sound right? I wonder why they were charged extra fees seeing as the loan was repaid even before the first payment was taken? Seems quite alot £336 extra?
(the loan was taken over a 3 year period)

Any advice would be greatly appreciated, thanks in advance!

immoral_angeluk

They'd need to check the agreement for any early repayment charges but it's likely that although they had a 'holiday' interest was still accruing during this period.

gstir_2

there were no early repayment charges and they werent given any other option to repay the first loan installment any sooner.

immoral_angeluk

gstir wrote: »

there were no early repayment charges and they werent given any other option to repay the first loan installment any sooner.

Are you sure? Have you checked the agreement? Have you asked the bank why it was higher then?

gstir_2

No, my Mum and Dad didnt ask why it was higher, they just went ahead and paid it, it was only when they told me that I said they should have queried it. Is it worth me doing a letter to the bank asking what it was for on parents behalf?

CLAPTON

what was the APR

what do the T&Cs actually say about early repayment; please quote the exact details

in any case they will obviously charge the interest between when they took the loan to when they repaid it

Apples2

It was only a payment holiday, not an interest free period.

Sounds about right

_Andy_

Nothing to do with 'fees', theyve just been charged interest as per the T&Cs of what they agreed to

gstir_2

Just been having a read thru some posts on the consumer action group sites, and a few people in the same position as my Mum and Dad have written to 'complaints' department in the branch stating the following -
section 71(2) of the CCA74

71 Cancellation: repayment of credit
(1) Notwithstanding the cancellation of a regulated consumer credit agreement, other than a debtor-creditor-supplier agreement for restricted-use credit, the agreement shall continue in force so far as it relates to repayment of credit and payment of interest.
(2) If, following the cancellation of a regulated consumer credit agreement, the debtor repays the whole or a portion of a credit—
(a) before the expiry of one month following service of the notice of cancellation, or
(b) in the case of a credit repayable by instalments, before the date on which the first instalment is due,
no interest shall be payable on the amount repaid.
(3) If the whole of a credit repayable by instalments is not repaid on or before the date specified in subsection (2)(b), the debtor shall not be liable to repay any of the credit except on receipt of a request in writing in the prescribed form, signed by or on behalf of the creditor, stating the amounts of the remaining instalments (recalculated by the creditor as nearly as may be in accordance with the agreement and without extending the repayment period), but excluding any sum other than principal and interest.
(4) Repayment of a credit, or payment of interest, under a cancelled agreement shall be treated as duly made if it is made to any person on whom, under section 69, a notice of cancellation could have been served, other than a person referred to in section 69(6)(b).

Is this Consumer Credit Act still in force? Just want to fully explore this as i would hate to see my Mum and Dad being ripped off, the £300+ better in their pockets than the banks.

Thanks folks!

Firefox1975

To be fair to the bank your parents had the money for nearly 2 months.

Did you expect them to just pay back the £5,500 and not owe anything on top? that would be a bit naive.

The £300 odd seems fair enough IMHO. Is it worth them kicking up a fuss when the bank could quiet easily close their accounts afterwards and leave them with questions to ask when opening accounts elsewhere.?

i,e "why do you want to bank with with us?"

" well our last bank charged us £300 for a £5,500 loan that we realised 2 months later we didn't actually need so just paid it back after 2 months and then complained about the "excessive" charges"

The values involved are not worth tarnishing your reputation for.

I know you are being very open with your query which is fair enough so please don;t take my reply the wrong way, I just don;t think its worth persuing.:)

Apples2

I too think you are flogging a dead horse.

(a) before the expiry of one month following service of the notice of cancellation, or
(b) in the case of a credit repayable by instalments, before the date on which the first instalment is due,
no interest shall be payable on the amount repaid.

Point a. They had the money for 2 Months before they requested settlement.

Point b. The first instalment was due after 1 Month, but they opted to take advantage of the payment holiday on offer.


I have seen posts where people have successfully challenged the final payments where they realised this payment holiday accrued interest.

I have not though, seen any evidence of people having an interest free loan for over 2 months.

I still can't see where anyone is being ripped off. I don't know of anywhere which lends money for any period for free.