GE Money Loan....

oli19812005

Hi,

I've been looking at my girlfriends outgoings this morning as she's struggling to save money and isn't sure where it's going.

The first thing I've looked at is a loan on some doors she has had fitted at her home. The doors were fitted by St Helens Glass and I believe the loan was arrange by them.

I'm going to keep this first post brief and add more information as I get it. I just wanted to get the ball rolling as it were.

The doors cost just shy of £2000

Looking at the statement she gave me to look at (Which was for 2009/2010) it appears each month she pays £44.73 off the loan only to be charged around £35.00 a month in interest hence the loan hasn't gone down so much.

The loan was taken out in 2006 and payments are still being made...the loan sheet states the loan period is 120months!

I've asked her to get in contact with them and ask for an up to date statement for starters.

I've no idea if she is paying PPI on the loan so I've downloaded the forms off this site to request the terms and conditions of the loan and start that process.

Is there anything else I should look at or is she stuck with this loan????

Any help would be much appreciated, if this is in the wrong forum could a moderator please move it or advise where it should be.

Many Thanks,

Oli

TadleyBaggie

Based on those figures, the APR is around 24.5% and she ends up paying back 5367.60, i.e. over £3300 in interest.

oli19812005

Yes that is what I'd worked it out at this morning, to be honest to say I was shocked would be an understatement!

I'm guessing as she's signed for it so she's stuck with it but wanted to make sure, don't think she had no idea it was going to cost her this much.

Apples2

It isn't a massive debt so depending on her circumstances, she could probably beat that with a different loan and clear it (read up on the terms for early repayment)

You'd be better off requesting a Settlement Figure (as well as) the current statement.
The Settlement figure will show the amount she would have to repay to clear it now (or within the 30 days it is valid for).

oli19812005

I'll get her to request a settlement figure.

Thanks,

Oli

oli19812005

Hi,

Just an update to the thread and further clarification needed, on loans I have taken in the past I've just paid my monthly payment and at the end of the loan term it has been paid off. I'm concerned that this won't be the case with my OH's loan.

We received a settlement figure of £1522.00.

I'm struggling to understand interest charges, is this not already included within the £44.73 a month she pays????

£44.73 x 12months x 10years = £5367.60

If so where does the charge of £35 a month interest come from after her direct debit is taken, will this loan be paid off in 10years or is this interest charge going to keep it going for a lot longer?

Apologies if this seems a silly question, I just want to help out my girl and make life a little easier for her financially.

redpete

oli19812005 wrote: »

We received a settlement figure of £1522.00.

I'm struggling to understand interest charges, is this not already included within the £44.73 a month she pays????

£44.73 x 12months x 10years = £5367.60

If so where does the charge of £35 a month interest come from after her direct debit is taken, will this loan be paid off in 10years or is this interest charge going to keep it going for a lot longer?

Each month the amount of interest paid as part of the monthly payment reduces as the capital (originally £2000) gets smaller. The first payment would include about £40.80 interest, after 5 years the monthly interest would be about £31.60.

If she carried on paying the loan to the end of the 10 years the loan would be paid off. She would be paying maybe another £2300 between now and then (depending which month in 2006 she took the loan out).

By paying early she saves on most of the interest she would be paying, hence the settlement figure of only £1522. (10 years for a £2000 loan seems ridiculously long to me by the way. By the time she's paid for the doors she could easily have moved, and maybe the doors need replacing again!)

oli19812005

Thank you that's put my mind at rest.

And yes, it is a ridiculously long time to take a loan out of that amount, it's also a ridiculous amount to pay for two doors once the interest has been added - had I known her at the time she wouldn't have taken this loan out.

I've sent a letter to GE for a copy of their terms and conditions when the loan was taken out just in case she was mis-sold PPI, if she gets something out of this I'm sure she'll be happy.

Thanks again for the explanation.