I need to understand

Hammerhance

Can the loan company do this?

I bought a kitchen at the start of April, financed with a loan of £2430 which was due to start on the day the kitchen was delivered.

The kitchen was delivered on the 22nd May and I received my first communication from the loan company on the 27th May. I rang up that day to find that my settlement figure was £2517, £87 more than the loan itself, to be told that they had 'front loaded all the interest'.

What does that mean?

It seems to me like a stealth tax, not accumulated interest and the delay in communicating with me seems rather contrived, forcing me into having to pay at least some interest, 'their fee' I suppose.

Thoughts?

[Deleted User]

They're allowed to charge two month's interest on an early settlement.

It's not a tax.

DCFC79

Hammerhance wrote: »

Can the loan company do this?

I bought a kitchen at the start of April, financed with a loan of £2430 which was due to start on the day the kitchen was delivered.

The kitchen was delivered on the 22nd May and I received my first communication from the loan company on the 27th May. I rang up that day to find that my settlement figure was £2517, £87 more than the loan itself, to be told that they had 'front loaded all the interest'.

What does that mean?

It seems to me like a stealth tax, not accumulated interest and the delay in communicating with me seems rather contrived, forcing me into having to pay at least some interest, 'their fee' I suppose.

Thoughts?

Have you had a search on the internet for " front loaded all the interest " ?

Yes ive heard of it with reagrds to loans.

comeandgo

No problem with that, most loans are front loaded, that sounds like a decent enough settlement.

DCFC79

comeandgo wrote: »

No problem with that, most loans are front loaded, that sounds like a decent enough settlement.

Sounds very good.

Hammerhance

Cool, my question answered. Thanks everyone, and no I didn't google the answer as you can get a mix of contrasting answers on there. Never know what's correct.

Feel slightly mis-sold as told I could pay it off immediately and not pay any interest (had cash to pay it there and then but was given a discount to take the loan). I won't die bitter.

somethingcorporate

As long as the discount was greater than the fee you are still quids in!

JuicyJesus

You may have had a 14 day cooling off period wherein you would pay no interest so long as you paid all the money back. However that cooling off period, if it existed, would have started on the day the agreement was signed.

EDIT: The cooling off period only applies to distance selling, if you bought the loan and kitchen face to face it would not apply; http://whatconsumer.co.uk/cooling-off-and-cancellations/