Please advise on loan early settlement issue

Stealth007

Hi

I took out a loan last March. It was high interest loan taken over a 3 year period, however a family medical emegency meant that was my only option at the time. However, i committed myself to aim to pay this off within one year as i would not want to pay such high interest for too long!

The loan was for 4824 payable over three years. The first two payments were for 144.75 documentation fee each and there then follow 34 payments of 238.29. I have made every payment on time by direct debit and have never missed nor made a late payment.

I have worked hard over the year and am now ready to settle this loan early as I have £4000. I called the loan provider in March after I had made my 12th payment and asked for an early settlement figure. The figure provided to me was about £350 more than the figure which i worked out using DualCalc. By Dualcalc estimation I should pay £3946.32.

However, my loan provider quoted me £4298.

I queried the settlement figure provided with my local branch. It said i should raise the issue with "Head Office". Head Office then sent me an annual statement of accounts, which actually raised more concerns with me. I was concerned that the closing balance on the annual statement was higher than what I expected it to be based on the figures in the table of repayments which was provided to me at the start of the loan agreement.

I therefore decided to have a closer look at the detailed figures in Table of Repayments which was handed to me at the start of the contract agreement, and appear to have spotted some flaws with it.

I added up the figures in the loan repayment columns , and found out that they actually add up to more than the total amount of capital that was advanced to me. The amount of Capital advanced to me was £4824. However adding up the loan repayment amounts in the loan repayment columns works out at £4954.54.

Please note that i did not take Repayments Protection Insurance out with this loan. The secondary loan is for critical illness cover and separately worked out fom the main loan.

On the other hand, the figures in the interest repayment columns add up exactly to the interest figure in my loan contract agreement.

My understanding is that in an amortization table the overall figures have to add up. I am aware that i'll be paying more of the interest and less of the capital at the beginning of the loan. And that the opposite will apply towards the end of the loan where i'll be paying less interest and more towards the capital. However, surely the payments that I pay over the course of the loan towards the capital and which are indicated under patments made against the capital advancd, should exactly match the capital advanced to me. And the same should apply for the interest payments.

So, although the headline figures and repayments that i have to pay over the duration of the loan appear correct, it is the "figures-within-the-figures" that are of concern. If , as i believe, this schedule of payments is wrong, it could mean that at any point over the duration of the loan, my outstanding balance will be artificially higher than it should be. It seems that my capital balance has been artificially skewed to give a slower lowering of the balance than is correct. As the outstanding balance is one of the parameters used to calculate the settlement rebate, it could mean that my loan provider is using a wrong figure to calculate my rebate.

Any advice anyone can give would be gratefully received as I am speaking to Head Office again tomorrow. i knew that it was a high interest loan when I took it and do not expect to pay less than what i am legally required to. I have worked hard to pay this off, however, it does seem that there might be a bit of fiddling going on here by my loan provider with regards to how it is calculating the settlement amount.

Thanks

jonesMUFCforever

What about early settlement fees?
What do the terms and conditions you signed say about repaying early?

Stealth007

jonesMUFCforever wrote: »

What about early settlement fees?
What do the terms and conditions you signed say about repaying early?

There are no early settlement fees other than the fact that the loan provider can defer the settlement date by one month. This, of course, means that the loan provider can charge an extra month’s interest, which is a fact that I had noted this and indeed had already factored this into my Dualcalc calculation. Nor are there any closing admin fees. The only admin fees are those which I paid separately at the start of the loan agreement

My issue really is with the amortisation table which has a few dodgy entries. For instance there is an entry for one month which records £0.00 paid against the principal. This despite the fact that I have paid towards the principal every month. I believe that if this is true it will in effect mean that my balance is showing as being cleared at a lower rate than it actually is. Such an issue would only become apparent when one wants to pay off a loan early and is presented with a higher balance than hat it should be.

It’s unfortunate that, as a new user, I cannot post the amortisation table here as what i'm saying might be clearer.

I have raised this issue with ‘Head Office’ auditors who said that they are having a meeting about this and will get back to me in a couple of hours, which was 4 hours ago. My local branch also say they cannot comment now because it is being looked at by ‘Head Office’! i have threatened to go to the FOS, but need to get a reply from the 'Complaints' Officer of my loan provider first

chanz4

They will use a repayment calculator, companys dont just jump if you say your going to the fos.