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Early Payment Penalty - Secured Loan

ollyno1uk
ollyno1uk Posts: 3 Newbie
in Loans
Hi

Back in early 2008 I was in trouble and I had to take out a 27k 25 year secured loan with Nemo Finance.

I am now in a position to clear this loan. Upon receiving a recent statement it appeared that after 4 years I had paid off nearly 2k bringing the load amount to £25k. However when asking for a settlement figure I was told that I would have to pay just over £27k.

They stated that this was because they had to cover their costs associated with getting the loan.

Now I can understand the reasoning and I know it was my own fault for getting into the mess in the first place however paying a £2k penalty charge seems criminal.

I'm assuming that I just have to roll over and accept it but I thought I would check here before I send the payment in case there is anything I may be able to do.


Thanks a lot
Olly
«1

Comments

  • BugsyBrowne
    BugsyBrowne Posts: 5,697 Forumite
    Contact the FSA if I was you .
  • Tixy
    Tixy Posts: 31,455 Forumite
    Have you asked them for an explanation/breakdown of the additional charge between your statement balance and the settlement figure?

    Have you compared this to the original agreement to see what it says about early settlement interest and early settlement costs plus any costs that are due at the end of the agreement regardless of when you complete payments (secured loans sometimes have a final admin fee on them I think arguably in relation to removing the charge from your property).
    A smile enriches those who receive without making poorer those who give
    or "It costs nowt to be nice"
  • ollyno1uk
    ollyno1uk Posts: 3 Newbie
    Thanks for the responses.

    I called back up and checked and there is a £125 discharge fee.

    The other payment is made up from 5 months worth of interest.

    In the third year it would have been 6 months worth of interest, the 4th 5 months, 5th 4 months until it evens itself out. I am in the 4th year.

    I checked and there was no negotiation on those figures!
  • opinions4u
    opinions4u Posts: 19,411 Forumite
    star-fire wrote: »
    Contact the FSA if I was you .
    Why?

    I don't get this at all. Whas the FSA got to do with it?

    It is not unusual for a secured loan - a mortgage - to have early repayment charges.
  • sylvia1956
    sylvia1956 Posts: 5 Forumite
    ollyno1uk wrote: »
    Hi

    Back in early 2008 I was in trouble and I had to take out a 27k 25 year secured loan with Nemo Finance.

    I am now in a position to clear this loan. Upon receiving a recent statement it appeared that after 4 years I had paid off nearly 2k bringing the load amount to £25k. However when asking for a settlement figure I was told that I would have to pay just over £27k.

    They stated that this was because they had to cover their costs associated with getting the loan.

    Now I can understand the reasoning and I know it was my own fault for getting into the mess in the first place however paying a £2k penalty charge seems criminal.

    I'm assuming that I just have to roll over and accept it but I thought I would check here before I send the payment in case there is anything I may be able to do.


    Thanks a lot
    Olly

    hi Olly, i have taken out a £12000 loan 5 years ago with GE money, i have been reading the small print, and it says they want £708 for every £1000 borrowed if i settle early, any thoughts? i would be grateful for any help
  • Tixy
    Tixy Posts: 31,455 Forumite
    sylvia1956 wrote: »
    hi Olly, i have taken out a £12000 loan 5 years ago with GE money, i have been reading the small print, and it says they want £708 for every £1000 borrowed if i settle early, any thoughts? i would be grateful for any help

    What is the exact wording of this section?
    A smile enriches those who receive without making poorer those who give
    or "It costs nowt to be nice"
  • sylvia1956
    sylvia1956 Posts: 5 Forumite
    Tixy wrote: »
    What is the exact wording of this section?

    If you exercise your right to settle this agreement early the following amount will be payable for every £1000 borowed £708. 40, i`m going to ring for a settlement figure, as the loan was over 15 years, and see what interest i will be refunded for early settlement, thanks for the reply
  • Tixy
    Tixy Posts: 31,455 Forumite
    What was the APR on your loan?

    Was the total cost of credit on the agreement £8500.80 (i.e 12 x £708.40)?
    A smile enriches those who receive without making poorer those who give
    or "It costs nowt to be nice"
  • _Andy_
    _Andy_ Posts: 11,150 Forumite
    star-fire wrote: »
    Contact the FSA if I was you .

    On what grounds exactly?
  • sylvia1956
    sylvia1956 Posts: 5 Forumite
    Tixy wrote: »
    What was the APR on your loan?

    Was the total cost of credit on the agreement £8500.80 (i.e 12 x £708.40)?

    £12000, with a variable apr, 10.80% on the agreement
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