Mis - advised Lloyds loan ?? help needed .

timetime1969

Hi - Newbie here

back in 2005 - my wife was struggling with finances due to being an IT contractor - haphazard pay days etc , and hence her Lloyds Credit Card was being used and she consequently fell behind with payments ( x1 my wife seems to recall - we hadn't met yet )

January 2006 Lloyds insisted that her Credit Card MUST be paid off ( £6000.00 ) immediately and drafted up a loan for £6800.00 , they put the loan together , made my wife sign - then they took £6000.00 from the loan and settled the Credit Card , but also kept the card open with a balance of 0.01p ( it has not been used since ) .

Firstly , I find it strange that they would do this .... but more so the loan itself seems well , also strange . They loaned out £6800.00 over a massive 143 months ! at 10.6 APR , why ? to pay off a credit card that had flexible payments anyway . It was Lloyds who apparantly suggested 143 months. Surely they put my wife in a much worse position than she was - as the minimum payment on the CC was only about £70.00 per month and as periodically she was paid great large sums of money from her contracting - she could pay great chunks off .

Something just doesn't seem to gel here, she has over the years paid off more than the £81.87 per month repayments , but I see no advantage of this at all ? she gets a statement once a year .

If anyone can put their thoughts accross I'd be very grateful - I know the info seems a bit sketchy , my wife is trying to recall facts as I speak .

thanks
Adrian.

BoGoF

"Made my wife sign" - how exactly did they do that then.

KingElvis

They just converted her credit card debt into a loan, they can't FORCE you to do this but it's better for the bank as the grand total can only go down from that point and not back up, as it can with a credit card.

I would imagine she was flagged as a risk with that card and they did the thing that was safest for them. Look at it this way, at least the debt will have gone down.

somethingcorporate

Swings and roundabouts. The money that you haven't paid off the credit card is now sat in the bank, no?

timetime1969

somethingcorporate wrote: »

Swings and roundabouts. The money that you haven't paid off the credit card is now sat in the bank, no?

Do you mean the £800.00 ? well it was in the bank I suppose , long gone now though....

somethingcorporate

No, sorry. I was referring to the lumps of cash you would have used to pay down the credit card due to erratic income. You should be able to use these to repay the loan back quicker. There is often a small penalty for repaying loans early but it is not too punitive.

Firefox1975

They have probably done her a favour.

was teh APR on the Credit Card higher than 10.6 %.

had she taken out cash advances at 20.00% +?

whether the debt is on CC or on a loan it makes no difference.(apart from a lower APR of course!)

And any financial institution would automatically pay off the Credit Card held as that was the whole point of the loan!

RichGold

Why did she borrow £800 more than the original debt was anyway?

Why didn't she check how long the long term was?

Why didn't she just stick with the credit card she already had?

What exactly is the problem here?

timetime1969

RichGold wrote: »

Why did she borrow £800 more than the original debt was anyway?

Why didn't she check how long the long term was?

Why didn't she just stick with the credit card she already had?

What exactly is the problem here?

yes exactly ! they put this together at that amount and that long term - I would have thought it simpler to just keep the card and chip away at it , as she could have done , sometimes in large lumps . The problem here is that the total repayable is £11,707.41 from a £6800.00 loan ( It looks like the £800.00 was to clear overdraft )

timetime1969

KingElvis wrote: »

They just converted her credit card debt into a loan, they can't FORCE you to do this but it's better for the bank as the grand total can only go down from that point and not back up, as it can with a credit card.

I would imagine she was flagged as a risk with that card and they did the thing that was safest for them. Look at it this way, at least the debt will have gone down.

thanks KE , sounds reasonable - But ! why did they let her keep the credit card if that was the case - she still has it ! ( unused since ):)

Firefox1975

But she can still chip away at the loan? thus reducing the total payable?

And to answer you question maybe the Rep got some commision for selling the loan, who knows, either way I still think your missus is better off.

Teh £6,000 on the card would not have remained static - that would also have incurred interest.........