i've cancelled my loanguard..was i conned

moneybackplease

I cancelled loanguard on personal loan with rbs. It's a 5 year loan of which i've repayed 24 payments out of the 60 .Repayments were £252 / mth which INCLUDED loanguard of £52 / mth .... so I cancelled expecting to save £52 / mth. RBS sent me a confirmation letter .... that's good I thought no hassle in that until i read further on in the letter .They said my repayment will reduce but not by the amount of of the loanguard payment.Their reason was that repayments for insurance are higher at the start of a loan due to the risk involved and lower at the end of a loan. So my new repament is £226 / mth . I suppose what I'm trying to say is .. on a £10k loan over 60 mths there is an arrangement fee ( i accept that they need to make a profit from me ) ... they get their interest up front ( i accept that they need to make more profit from me ) .... loanguard .... but I've cancelled that now so can anyone tell me where the remaining 36 x £26 have gone. By the way i'm so confused that I don't even Know if I was mis-sold the loanguard , so I'm not fighting that one.

MarkyMarkD

Loan protection policies involve a payment to the lender, which is then used by them to pay the insurer (not much %) and for commission (most of the %).

The insurer's premium can be calculated as a set-up cost and a cost for the risk. If you cancel early, the insurer's element of the refund will commonly be less than pro-rata as the set-up cost will probably not be refunded. Furthermore, if the policy includes life cover, the risk is proportionate to the loan outstanding and consequently the premium will be front-loaded.

The lender's commission may also be considered to be front-loaded - i.e. to include a set-up cost and an ongoing element. This is because they probably pay their staff commission (or bonuses or whatever) for selling the policies, which they probably don't claw back if the customer cancels two years later. So similarly the commission element refund probably won't be pro-rata.

The lesson from all this is not to take out PPI unless you really want it.

moneybackplease

I'm getting wise to all these bankers ..... took years !

inmypocketnottheirs

Sorry moneybackplease, did you say bankers???? it's just that my hearing isn't as good as it once was...

moneybackplease

Definetley said bankers ,a whole bunch of bankers ... I'm not going to get screwed as much as I did in the past !

inmypocketnottheirs

I think there should be a collective noun for a group of bankers. How about a 'scatter' of bankers maybe?

moneybackplease

I don't want to be scatterd by their cash anymore only ... and pay through the nose for it !!!
Any thoughts on my loan and dropping the PPI,should my repayments drop by £52 /mth or £26 /mth ....I feel cheated by the bank (no surprise there)

moneybackplease

Update ...................claimed back PPI payments + interest , was mis-sold cos I didn't know you could buy your own insurance , anyway waiting on cheque for £ 2,200

jonesMUFCforever

Just to balance things out - just read these boards from posters who cannot afford to pay back what they have borrowed following a change in circumstances.
I hope OP can afford the repayments for the next 3 years even if he falls ill or is made redundant.