I think my M&S Loan was mis-sold to me

noz85

I applied for a loan recently through M&S money that I used to buy a car on the 28th of January this year.

When I was going through the application (on the telephone) I asked the agent if I would be able to use the funds generated by the sale of my old car to pay off a lump of the balance as I wanted this to reduce my monthly payments.

The agent said yes you can do this.

The whole reason I went for this loan was because of the good rate of APR and also because I could quickly reduce my monthly repayments by paying a chunk of the balance off.

When I rang M&S money today to confirm the payment details (whilst in the bank ready to pay off the chunk of the balance) I was told that this WOULD NOT reduce my monthly payments!!! :mad:

I told the customer support person what I have just written above but said that there was nothing the could do. I told them I will be settling the balance as soon as possible and taking my business else where.

What I want to know is (if you would be so kind), what are my rights here? I am adamant that I have been misold this loan. If the sales person had told me the truth at the point of sale and said that I couldn't reduce my monthly payments then I would have definitely not taken this loan.

I feel like I've been stitched up here, as there is now interest to be paid for something that I don't want.

What can I do?

Thanks

Emmzi

ask for a transcript of the call as a starting point.

~Brock~

Under European Consumer Credit Directive rules brought in a year ago you have the right to partially settle the agreement.

You need to make the lender aware that you wish to do this and they must issue you with a settlement figure based upon the lump sum you wish to repay. This settlement figure will include a rebate of interest based upon the size of the settlement.

The remaining balance is then repayable either at a reduced payment for the same remaining term or at the original payment for a reduced term, however the option offered is the lender's choice. There should be some detail about with within the terms of the agreement.

~Brock~

See here (Section 14)

noz85

Thanks Brock.

The problem wasn't being able to make a partial settlement or chunk paid off as I put it. I knew I could do that. The problem is that I was told that doing so would reduce my monthly payment amounts. They are now saying that it will not.

Cheers

Apples2

Surely if it were mis sold you would still give them their money back to cancel the whole deal anyway, which is exactly what you intend doing?

Caz3121

best to get the transcript but the issue could be on the different understandings of what you asked
pay £200 per month for 36 months...."if I pay a lump sum will this reduce my monthly payments?"
if the result is you end up paying £100 for the remaining 30 months then the answer is yes
if the result is you end up paying £200 for a reduced 15 months then the answer could also be seen as yes
the difference one reduces the amount and the other reduces the number of payments, the transcript of the call may be able to clarify or you may find you meant one thing and the person on the other end thought another

noz85

Caz - I guess this could be the case.

Apples - Yes, but I'm bothered about all that interest I'm going to have to pay for a loan that I haven't even started paying for yet just because there was a mistake and I have to shift it on to another company.
Going to be very expensive I think.

~Brock~

noz85 wrote: »

Apples - Yes, but I'm bothered about all that interest I'm going to have to pay for a loan that I haven't even started paying for yet just because there was a mistake and I have to shift it on to another company. Going to be very expensive I think.

Please read my previous post again. You have the right to partially settle the agreement and receive a rebate of interest based upon the amount you repay. This means that you are NOT going to have to pay all that extra interest.

It will probably cost you more to shift it because you will be borrowing a lower amount from another lender and the APR may well be higher as a result.

noz85

~Brock~ wrote: »

Please read my previous post again. You have the right to partially settle the agreement and receive a rebate of interest based upon the amount you repay. This means that you are NOT going to have to pay all that extra interest.

It will probably cost you more to shift it because you will be borrowing a lower amount from another lender and the APR may well be higher as a result.

Thanks again Brock. I read section 14 of your link and have since spoken to M&S and I will be charged a penalty for early settlement of one months interest and I will only pay interest for the 3 months that I have had the loan when given my settlement figure. Not the end of the world. Could have been avoided though. Just a misunderstanding I suppose. Worse things happen eh?

I think I'll be replacing the M&S loan with a Savvi loan at 7.2%APR. Next best is Sainsburys at 7.7%

Didn't fancy the Zopa one as they charge a £50 arrangement fee which defeats the object of having the better rate of APR!

Any body got any warnings before I go with Savvi?

paddyrg

Basically, as you've probably summarised from above, a lump-sum will either reduce the payments or the term of the loan. M&S reduce the term, it seems. Overall it will still be cheaper for you - cheaper in fact than reducing the monthly payments overall!