Barclays rip off loan advice?

richbhill

Hi - recently my sister in law came to me as she was worried about the financial situation she'd got herself into and wanted some help. When I took a look at her finances, it was generally not too bad with a bit of cost cutting etc but one particular loan from her bank Barclays was of real concern and I wanted to know if others had had the same issue and whether it was possible to deal with it effectively.

Basically she took out a 60 month loan last July of £10500 and the monthly payment is £302. APR 19.99%. Recently Barclays advised her to add her £1000 overdraft to this loan taking the balance even higher. This seems really bad advice to me, especially as Barclays have non-secured loan rates of 5.1% for this amount.

Does anyone have any advice? I would like to approach them and at least have it transferred to the 5.1% rate, but actually demand a refund on the exhoribitant interest since lat July. The redemption fee is one months interest so at the very least we can take it elsewhere for a charge of £175.

All views very welcome.

somethingcorporate

Advertised rates are not guaranteed rates (the headline rate only needs to be given to 51% of successful applicants). They can offer a loan at any rate they want to (or not at all) depending on their perceived risk of the person applying.

The 19.99% rate makes it appear that they thought she was a bad risk and priced accordingly. This would have all been set out in the paperwork that was signed by your sister in law.

If you SIL is perceived high risk at Barclays there is nothing to suggest she would get a better rate (or even a loan) anywhere else, but there may be little harm in trying perhaps a softsearch at nationwide for example.

ILW

Has anyone actually offered her the 5.1% rate?

CLAPTON

maybe tell us a little about her financial situation

what are her total debts?
how much does she earn?
what do her credit records show?

R_P_W

So she applied for a loan, she was offered a loan, she knew the payment and interest being charged? She accepted it?

What is the problem?

meer53

Your SIL must have agreed to the higher interest rate when she took out the loan. The 5.1% Barclays advertise will be a representative rate which means that only certain customers will be offered this rate. If your SIL was offered a loan last year at 19.9% then it is highly unlikely the 5.1% will be available to her.

I also wouldn't assume that you will be able to move the loan somewhere else with a lower interest rate. If Barclays offered 19.9% she will be looked on as a high risk, other lenders will see her the same. She's not been ripped off, the loan was offered to her, she agreed to it.

gb12345

meer53 wrote: »

I also wouldn't assume that you will be able to move the loan somewhere else with a lower interest rate. If Barclays offered 19.9% she will be looked on as a high risk, other lenders will see her the same. She's not been ripped off, the loan was offered to her, she agreed to it.

And add in the fact that when/if she applies to move the loan she will be underwritten on the basis of having 22k of debt, so unless she is earning over 44k she has no chance.

lippy1923

No one is entitled to the headline rate. The banks can nit-pick and chose whoever they want to have this rate, usually low risk customers who have squeaky clean credit files.

As for the classic thread title "rip off" - it's not. Rip off means to cheat someone or deprive someone of something by deceit. As barclays would have had all the information including the 19.99% rate on the paperwork she signed, there is nothing rip off about it.

They offered but she didn't have to accept it. By all means look elsewhere but depending on her income and the fact she was classed as a risky customer already by one bank suggests she may struggle to get another loan elsewhere with this already large outstanding debt.

MentalMinnie

Just because a bank offer loans at a low rate (of say 5.1%) doesn't mean that every applicant will be given that rate. I don't understand why so many people think that they are entitled to the low rate, and when offered something different, and higher, slate the banks etc!?

mjm3346

richbhill wrote: »

Basically she took out a 60 month loan last July of £10500 and the monthly payment is £302. APR 19.99%. Recently Barclays advised her to add her £1000 overdraft to this loan taking the balance even higher. This seems really bad advice to me, especially as Barclays have non-secured loan rates of 5.1% for this amount.

You have to compare like with like as she clearly cannot get the 5.1% rate.
She will be paying around 19% if she has an authorised overdraft, more if she doesn't, so there is not much between that and the loan rate.
If at the same time as they increase the loan they remove her overdraft she will be paying it off instead of using it every month and will very quickly be making a saving on interest charges.

iolanthe07

People are becoming far too fond of screaming 'rip off' and 'scam' and suchlike, when banks are merely pursuing perfectly normal commercial lending practices.