Mis-sold a loan???

Nikkib_4

I recently took out a loan which I then needed to 'top up' only 3 months later. I explained to my 'sales advisor' in the branch what I wanted to do and he advised the only way to do this was to take out another loan and pay off my existing. I checked if ther was any early payment fees or if I would be out of pocket by doing this and he said no. However, he did not explain that I had actually only been paying interest with a little capital which meant that my past 3 months payments may have literally been thrown down the drain. I feel some what cheated by this and believe I should have been advised before accepting. I would appreciate advice on where I stand as I have already complained and they ignored me!!

regularsaver1

howe much was the top-up?

and how much would the interest have been if you took a sole loan for the top-up and still had the other one?

Nikkib_4

Original loan was £7500 and I wanted to add £2500. I made 3 payments which totalled nearly £1000 but only £150 was deducted from the capital so I still had to repay £7350. Maybe they have compensated for this some where but no one has taken time to explain it to me, I just feel I have paid a lot of money that has gone nowhere??

regularsaver1

You need to ask them to break this down for you

the rate for £2500 could have been a totally rate for that of £10k - so ask them about this too

tyllwyd

The extra money hasn't disappeared - it was interest on the money that you borrowed over those three months. It's quite normal that when you take out a loan, the monthly repayments stay the same but at the start they are mostly interest and a small amount of capital repayment, and near the end they are mostly capital and a small amount of interest.

Nikkib_4

I realise that now but this was not explained to me at the time, when i queried it, the advisor said he did not know what had happened and could not explain it to me, he even admitted that it seemed wrong??. How can he advise me on something he didn't even know himself how it worked. That is why I feel cheated, had I of known and understood I would have not bothered. I believe that advisors should be fully aware of the products & services they offer in order to properly advise their customers, if they are not, is the customer therefore being mis-informed and mis-sold these products/services??

roswell

Bad news is a mortgage works exactly the same along with all forms of borrowing.

dunstonh

I dont see anything wrong. You asked for the money, they lent it. They lent more and you werent charged anything for doing so. You are not financially out of pocket and they have done nothing wrong.

As roswell says, its how it works. In the early days, hardly only a little bit is repaid and gradually the amount increases over the years until there is hardly any interest being paid.



The red is the normal payment and the rest show the benefits of paying more or making an immediate payment (you can ignore them as that doesnt apply).

You can see that the red line shows little decline to begin with.

regularsaver1

Sounds like it was non-advised, as in your decision to go ahead

bank advisers do not always give advice

tyllwyd

Nikkib wrote:

I realise that now but this was not explained to me at the time, when i queried it, the advisor said he did not know what had happened and could not explain it to me, he even admitted that it seemed wrong??. How can he advise me on something he didn't even know himself how it worked. That is why I feel cheated, had I of known and understood I would have not bothered. I believe that advisors should be fully aware of the products & services they offer in order to properly advise their customers, if they are not, is the customer therefore being mis-informed and mis-sold these products/services??

I agree that the advisor should have been aware of how the loan worked - it's not very impressive. But you haven't lost out as such - you borrowed the original amount, you made your repayments but not much was paid off the capital. That was the same whether or not you borrowed an extra amount.

Are you saying that your new loan is for a higher amount than you thought it would be, and they didn't explain what the new total would be before you signed the papers?