rule of 78, new rules?

Rabiddog_2

New rules have stopped Rule of 78 for loans taken out since June 2005, yet there's no respite for loans taken out prior to that, for which it continues until 2007.

This tantalising item is from the website itself.
Firstly apology's if I have posted this elsewhere.. I searched and couldn't find it.

I have an existing secured loan, which I am in the position to be able to pay back very soon:j , However the payback amount is quite high:( which I presume is because of penalty's and rule of 78, loss of interest compensation. The above quote implies that rule of 78 for existing loans (taken out before 2005) will not be applicable after 2007? So should I pay my existing loan pay now or wait till 2007 when (i hope) it will be considerably cheaper? any advice or pointers to other resources, in case you are not allowed to answer the question. Clarity required.

Tr@cker

I doubt it'll apply retrospectively, probably just loans taken out after 2007. It sounds like good news, its something the credit industry dont like to say much about not surprisingly because its a big rip-off.
First ive heard of it though, how have the rules changed ?

Rabiddog_2

Actually I have just read the "read this first" thread (yikes) and it explains somewhere in there that it will apply retrospectively, in may 2007 to loans taken out for 10 years or less and then in 2010? for longer loans.

This one is...Loans taken out prior to the introduction of the Act fall under it after 31st May 2007 if original term was 10 years or less...The date becomes 31st May 2010 if original loan term was more than ten years. Para 10 in this link refers:

http://www.opsi.gov.uk/si/si2004/20041483.htm

To really scare yourself take a look at Para 4... oh god .. if only I'd done latin at school

Tr@cker

On the example given-a 5k loan-i make that roughly £600 interest if early repaid after 12 months-still expensive. But really you want this to be compared with the interest paid under CURRENT rules to judge.

Tr@cker

Thanx for that though ive saved that link and i'll be asking my lender about this and what the diff is if as likely i pay up early.

CLAPTON

the change to rule 78 only applies to loans regulated by the CCA74.

This doesnot include secured loans so you may not benefit by its provisions.

if you would like to post full details of your loan I might be able to tell you if the settlement figure is reasonable.

i need
initial loan
length of loan
interest rate
monthly repayment
settlement figure and number of month left to pay

Tr@cker

Cant see anything that bars the new rules from secured loans Clapton if they're below 25k. but i guess many secured loans would be.

Tr@cker

Above 25k that is.

CLAPTON

secured loans are not regulated by the CCA 74 . The new rules are specifically for loans regulated by the CCA74. There is of course no reason why secured loans providers can't apply them if they like but it isn't mandatory.

Tr@cker

Clapton, yes they are. Check out colonial loans for one, on their home page left click on 'secured loans' Loans under 25k are regulated by CCA and over they are not.

Llyllyll

CLAPTON wrote: »

if you would like to post full details of your loan I might be able to tell you if the settlement figure is reasonable.

CLAPTON,

Any chance you could give me your opinion on a settlement figure if I PM you some details?

Cheers

Edit: No problem now, found quite a good tool for calulating early repayment amounts at: http://www.crw.gov.uk/dualcalc/.

Thanks.