Northern Rock Loan

Edwardia

Hi there hope you can help here.

In July 2006 OH took out a £25k unsecured loan with Northern Rock over 10 yrs. Because he didn't want their PPI, they upped the interest rate to 9.9% telling him that it made him more of a risk.

Personally, I feel that was sour grapes on their part )not making so much profit) and unjustified because he'd had several loans and HP before and paid it all off albeit not with Northern Rock.

After the loan was taken out, changes in the law meant that Northern Rock has to produce an annual loan statement. Although OH pays 323.71 pcm the statement only shows 11 payments per year and runs from June to May.

OH hasn't had a statement since May 2010 when closing balance was 23,957.54 (total loan is 38,845.20 with interest). The DD of 323.71 pcm is still going out of OH's account.

Looking at the original loan agreement, after 90 months the balance to repay the total loan under the Consumer Credit Act 1974 is stated as an illustrative figure of 8,612.80

The interest on the loan is fixed and the monthly repayment includes interest.

I'm not the greatest at maths but it seems to me that the 90 months period has passed without OH having been advised that he could pay up early and presumably save money ?

Can he complain about this ? Is the loan now low enough that he could pay it off with his tracker credit card or get a cheaper loan ?

Hope that you can offer suggestions. Thanks.

Tixy

I'd start by requesting a statement from halifax, and asking for a settlement figure.

Edwardia wrote: »

I'm not the greatest at maths but it seems to me that the 90 months period has passed without OH having been advised that he could pay up early and presumably save money ?

I'm not really sure at all what you mean by this, but if he took the loan out in July 2006 then he presumably hasn't paid 90 repayments yet anyway. But it sounds like its just an illustration to demonstrate to him how much the balance would be after a period of time, its not a particular clause or anything about at what point he can pay off the loan.

The loan agreement should contain information about settling the loan early, which he can certainly do at any time if he has the funds to do so, though there is usually a small penalty to do so.
It should also state if overpayments are allowed.

Whether he can get a cheaper loan, or any new loan at all would be totally dependant on his financial circumtances at the moment, how much he earns, how much his debts are etc etc, in general rates now are much higher than in 2006 (if all other circumstances remained consistent).

_Andy_

they wouldn't (indeed couldn't) have increased the rate for not having PPI with them.

Edwardia

really that's what the guy on the phone said. I remember OH was livid.

Tixy

If he had a written offer of a loan for that amount over that particular term that said the APR was say 8.9% with PPI but 9.9% without PPI then he might well have a case to make a complaint, but I doubt very that any lender would have sent out paperwork that would have such wording on it, and without paperwork he would struggle to get anywhere by making a complaint.

I know its stating the obvious but the time to challenge it would have been then, and asked if they could improve the APR or possibly tried another provider.

_Andy_

Edwardia wrote: »

really that's what the guy on the phone said. I remember OH was livid.

I had a couple of NR loans around the same time without PPI and the rate was unaffected. Nor would any lender be able to have such lending criteria.
He was probably mis-advised and it was down to scoring/credit profile. Certainly wouldn't have anything to do with PPI as the scoring system wouldn't take that into account. No lender would get away with that

Apples2

I had a NR loan of £7k in 2006 without ppi and my rate was unaffected at 6.9%.

Are you sure he didn't apply for the advertised rate, which went up when he actually applied (which is entrely normal)?

redpete

Edwardia wrote: »

Is the loan now low enough that he could pay it off with his tracker credit card or get a cheaper loan ?

I reckon the balance would be £14-15k by now although I don't understand the balance they gave for May 2010 (I reckon it would have been around £18k not £23k) nor the bit about only 11 payments a year showing in ther statement.

Edwardia

I worked out that June 2010 - Feb 2012 is 21 payments @ 323.71 = 6,797.91 therefore reducing outstanding amount to 17,156.63

Plopping through the letterbox today came an offer from Sainsbury's Finance for a Shopper Reward loan at 6.9% APR representative for 7.5 - 15k with a £100 Sainsbury's giftcard and double nectar points on shopping for 2 yrs and no set up fees.

So I'm wondering whether an early settlement figure would come in at 15k or under ??? This loan has two awards from other moneysaving websites, the latest just last month.

I'm just repeating what he was told on the phone..the paperwork came through at 9.9%.

If we could get 15k at under 9.9% for 60 months we'd save money presumably ? As mortgagepayer since 1999 with credit card amount 60% under credit limit and having been paying the loan without probs since 2006 and in same job for last 8yrs I'd hope his credit score has improved (not that it was terrible before).

geoffky

The call may of been recorded...send a request..

redpete

Edwardia wrote: »

I worked out that June 2010 - Feb 2012 is 21 payments @ 323.71 = 6,797.91 therefore reducing outstanding amount to 17,156.63

Then you need to add on the interest you would have paid over that period.