Advice on Redemption

solentsip

In February 2007 I took out a £5000 loan broken down as follows

Loan Amount 5000
Legal Fee 208
Broker Fee: 200
Payment Protection and Life Cover 974
Gross Loan 6382
Flat Rate 8.50%
Term 60 Months
Annual Interest 542.47
Total Interest 2712.35

Total Repayable 9094.35
Monthly Installment 151.57

The redemption date is 12th March which all payments will have been made totalling 9094.35. I received a letter from the lenders Solicitors which confirms the sum of £5341.97 remains outstanding. It states that it is necessary to clear the debt on the loan by the date stated. This amount seems to have been made up by interest charges over the period of the loan (Interest on Original Loan).

I was understanding that the 9094.35 was all I had to pay. The loan is secured on the property and I'm at my wits end as I do not have the £5341 and fear that I might loose my property because of it.

Any advice would be gratefully received. I intend going to CAB for advice as well.

Thanks in advance

opinions4u

Have you made all the payments on time?

Have you had any letters saying you are in arrears?

Is the interest rate variable?

What's the APR?

Who is the lender?

solentsip

Have you made all the payments on time?
I have missed some due to being out of work but are up to date.

Have you had any letters saying you are in arrears?
Yes, as stated above.

Is the interest rate variable?
Not that I'm aware of

What's the APR?
I thought it was a flat 8.50% as stated in my first post but further down on the sheet it states a Monthly Rate of 1.24% and Annual Rate of 15.99% - Calculated from the Term, Installment and Gross Loan.

Who is the lender?
Prestige Finance

It seems a bit worrying that having paid off over £9000 (Total Repayable) and after 60 months I still owe more than the original loan. Over £14,000 for a £500 loan.

Thanks

opinions4u

It could easily be interest, missed payment fees and arrears fees on missed payments, especially if they happened early in the term. Have you asked the lender for a breakdown?

I have missed some due to being out of work

What happened when you claimed on the PPI?

fear that I might loose my property because of it

You might. Your CAB visit is a very good idea.

solentsip

I did not claim on the PPI as I forgot I had it on the loan.

Further reading of the paperwork states
Money Advanced 6382
Days 1855
Interest 7181.86
(Interest is charged at the daily rate on a compounding basis)

I was (maybe foolishly) under the impression that total amount payable was all that I had to pay in order to clear the loan as the interest had been calculated.

Are there any options open to me at this point if it proves I still owe this amount

opinions4u

solentsip wrote: »

Are there any options open to me at this point if it proves I still owe this amount

1. Take a look at the potential of PPI mis-sale reclaiming (drop-down menu top right corner of this page). That should get you the premium plus interest on the premium back.

2. The most likely outcome for the loan itself is that you will negotiate an arrangement to continue paying £151 a month until it's repaid in full - with interest accruing through this period.

It's important that you also ensure no other fees are being added every month for late / missed / arrears. These are what I think have absolutely screwed you.