FirstPlus Loan

greeni75_2

We took out a secured loan with Firstplus in Feb '08, for £26,000. To date we have made 51 payments of £225. As we are changing our mortgage supplier, we are required to clear the balance of the Firstplus loan. Thinking there couldn't be too much outstanding we requested a settlement figure. We got a huge shock when we found out that we had only paid £1445.00 off the loan. I questioned whether all the interest had been added on from the start, and with told it was calculated daily and added monthly. I also questioned what our APR% was... 9%!. I was told that we had signed a variable rate loan, that started in Feb 2008 at 8%, and that they don't follow the Bank Of England base rate. I was also informed that for every £225 we pay, only £35 is taken from the balance. I am absolutely baffled how, after just over 4 years we still owe nearly as much as we borrowed!
Is this legal?
Do we have any hope of a fair settlement figure?
I also checked the PPI status, and we don't have it on the loan.

Many Thanks :mad:

[Deleted User]

There's always more interest at the beginning of the loan. As the years roll on, each payment will pay off more of the capital.

I'm guessing it's quite a long term loan?

CLAPTON

presumeably you borrowed it over 20 or 25 years?

anyway the maths is quite simple

monthly interest on 20,000 at 8% would start at

26,000 x 8%/12 = 173 or
at 9% it would be
26000 x 9% /12 = 195

so not a lot of your payments are going towards reducing the capital


it's an inevitable fact of borrowing over a such a long period

so the settlement figure seems fair

Duke203

Seem right I'm afraid.

A very rough calculation of £26,000 x 9% APR = £2,340 interest for the year.

Divided by 12 gives £195 in interest a month. If you're only paying off £225pm then yes the £35 capital repayment every month sounds 'reasonable'.

greeni75_2

Thanks everyone. Bit gutted now, thought we'd got a case for being ripped off!
I guess we'll just have to put it down as an expensive mistake.

Apples2

greeni75 wrote: »

I guess we'll just have to put it down as an expensive mistake.

Yup, afraid so.

This site was quite vocal during Carol Vordermans advertising First Plus at the time, it was always a shockingly bad product.

You won't find much support on this site for people trying to consolidate their debts against their homes, that "one simple monthly repayment" comes with a vicious consequence, as you have discovered.

http://www.thisismoney.co.uk/money/cardsloans/article-1678266/Trapped-by-Firstplus-loan-repayments.html

http://www.thisismoney.co.uk/money/cardsloans/article-1598479/Vorderman-slammed-over-TV-ads.html


.

greeni75_2

I feel so naive now... Thanks for your replies.