MSE News: Had a Barclays loan? You could be due share of £100m payout after blunder

TurnUpForTheBooks_2

Apples2 wrote: »

All seems correct to me, you agreed to a loan of about 21%.
£6k over 5 years is not a "normal" loan, sounds like there must have been some desperation at the time of applying.

Looks to me like there is some desperation in the bankerish tone of your post, Apples2 ...

What is not normal about £6,000 borrowed over 60 months, please (apart from the rip off interest rate that bankers tend to call normal)?

Apples2

I use the term "normal" as I don't consider a £6k sum (which isn't particularly large) repayable over 5 years an awful long time.

3 years I would consider normal, but not 5.
If you have to scrabble bringing monthly payments down to such a level in order to afford it, there is likely something fundamentally wrong with the budgeting.

My opinion of course.

tinkerbell28

Usually the best rates for loans are 10k + over short terms...so I get what apples is saying....

But from what I gather on this it is a technical error with how they worded statements, not how they calculated interest paid....

So the loan above at 22% is probably bang on the money....which isn't a good rate at all.

The other bad news is...it would seem it mainly affects people who were in arrears...only a few who had normal payments.

So looks like if you didn't pay on time, you get a rebate, if you did, nadda.

Win some, lose some!

TurnUpForTheBooks_2

Apples2 wrote: »

I use the term "normal" as I don't consider a £6k sum (which isn't particularly large) repayable over 5 years an awful long time.

3 years I would consider normal, but not 5.
If you have to scrabble bringing monthly payments down to such a level in order to afford it, there is likely something fundamentally wrong with the budgeting.

My opinion of course.

I think a little typo may have crept in there? I think you are saying that you consider that 5 years is an awful long time to take in paying off just £6,000 initial borrowing? You would normally expect such a modest sum to be planned to be repaid in say 3 years?

However, £6,000 over 5 years is still £100 pm repayment if interest was 0% so I don't get your argument which seems based upon your own idea of a normal personal income. That surely cannot be good if you are trying to advise low income customers? £6,000 is a great deal of money if you only bring home £1000 a month and that might be all your favorite barista at Pret brings home if he or she doesn't work all hours some god or Jon Temple gives!

Maybe £1000 a month take home wouldn't be enough even to get close to eligibility for a loan of that size once normal living costs are assessed against the income. How much do you reckon the cashier that introduced the customer to the personal banker might take home? Would even they be able to afford a £6,000 loan over 5 years, even with an employee rate of interest? Doubtful.

It is sometimes surprising how down in the doldrums many workers salaries have generally become whilst others seem to have cruised onward and upwards to the point they may not have a clue how the other half live


PS I would guess that if errors crept into arrears statements then there is a chance they may also have crept into early repayment statements when requested e.g. when the bank had advised consolidation into a new loan and provided a quote for early repayment. Certainly if one area of the operation has been shown to be miscalculating or mis-stating balances and/or interest, then the whole operation should have the drains up. Loans were being constantly churned in the bad old days, especially since every consolidation was an opportunity to sell or resell PPI.

As a previous poster said, many customers were perhaps overly trusting in their view that "they're the bank so they know best"!

ataylorrl

Does anyone know yet if this applies to First Plus loans as they were an arm or Barclays?

Cheers

tinkerbell28

TurnUpForTheBooks wrote: »

I think a little typo may have crept in there? I think you are saying that you consider that 5 years is an awful long time to take in paying off just £6,000 initial borrowing? You would normally expect such a modest sum to be planned to be repaid in say 3 years?

However, £6,000 over 5 years is still £100 pm repayment if interest was 0% so I don't get your argument which seems based upon your own idea of a normal personal income. That surely cannot be good if you are trying to advise low income customers? £6,000 is a great deal of money if you only bring home £1000 a month and that might be all your favorite barista at Pret brings home if he or she doesn't work all hours some god or Jon Temple gives!

Maybe £1000 a month take home wouldn't be enough even to get close to eligibility for a loan of that size once normal living costs are assessed against the income. How much do you reckon the cashier that introduced the customer to the personal banker might take home? Would even they be able to afford a £6,000 loan over 5 years, even with an employee rate of interest? Doubtful.

It is sometimes surprising how down in the doldrums many workers salaries have generally become whilst others seem to have cruised onward and upwards to the point they may not have a clue how the other half live


PS I would guess that if errors crept into arrears statements then there is a chance they may also have crept into early repayment statements when requested e.g. when the bank had advised consolidation into a new loan and provided a quote for early repayment. Certainly if one area of the operation has been shown to be miscalculating or mis-stating balances and/or interest, then the whole operation should have the drains up. Loans were being constantly churned in the bad old days, especially since every consolidation was an opportunity to sell or resell PPI.

As a previous poster said, many customers were perhaps overly trusting in their view that "they're the bank so they know best"!

I'm hoping so...our loan was never in arrears, we paid it in full, early with cash, not another loan. I said at the time the figures didn't seem right, but he thought banks knew best, he just wanted it gone as he hated debt. Our car pooped out so we had to borrow cash short term, until we got it all saved and paid off.

BRITGUY

Difficult to tell what it is about, but from my own experience my 5 year loan with them completed 2 months ago - a couple of years ago I had changed the monthly payment from 28th to a standing order on the 30th to tie in with my pay at the time (though I was told that was fine as long as money in by end of month) - though on one occasion I had been about two weeks late on a payment. Monthly payments were about £165. When the 5 years were up I was surprised that they said I still owed about £170, as I had not been informed that was possible. I paid my normal £165 next month but they then as a gesture of 'goodwill' let me off the remaining £5 (that was about 2 weeks ago). So may be something to do with increased interest charged without prior notification where payments delayed as in my case. Interestingly I had a very similar case with another high street bank but they backtracked very quickly and let me off the excess interest when I queried if and where I had been notified of this.

Apples2

BRITGUY wrote: »

So may be something to do with increased interest charged without prior notification where payments delayed as in my case.

That's precisely what it is, and a good example of what happens.

On acceptance, the lender knows exactly how much interest is being applied and when your repayments arrive.

Interest is accrued daily but applied monthly (when your payment arrives).

On payment day, your payment drops the capital outstanding by your montly payment amount, and they add all those days worth of interest to your account.

This is why you pay hardly any capital off your loan in the early days, it is mostly interest as the money you are paying interest on each day is at it's highest.

At the end of the loan term your monthly payment is nearly all capital and hardly any interest.
This can be seen using the calculator I linked to earlier and also brings loads of chants about "Front Loaded Interest" from so many posters (incorrectly).

By shifting your repayment right, you were accruing an extra two days interest on a higher sum outstanding.
The result of this is that your loan cannot complete on the same day as originally agreed (because you incurred more interest than was originally planned).

torcross1

Although I have never missed any payments, I have had 3 Barclay loans since 2008 (all superseded by another), on every loan I have changed the payment date to suit when I get paid.

Does anybody think I will be eligible for a refund on the interest?

thanks

Moneymash

I have been reading with interest the article on the Barclays loan interest error. I have a Barclays loan, so I am hoping this applies to me. I took my loan out in Sept 2008 and have the very letter they sent out in Oct 2008 advising they had updated their systems.

I have checked all my statements and there is an error on my first statement, my name doesn't appear in the same place as subsequent statements.

Also, more concerning is I totalled up my interest to date and despite over-paying these past 3 months (£2125.50), I am only £142 short of paying the entire interest amount for the whole loan, despite still having £1992 left to pay. Although I have just read in an earlier post changing my repayment date obviously affects the total interest payable. Had I not made any over-payments the loan was due to finish in December next year so there is no doubt I would have paid more interest than was in the loan agreement, even taking in to account the DD date change.

I realise that at the start of the loan you pay more interest than capital and that over the course of the loan this changes, but I still think I have paid too much interest. I'll just have to wait until next month to see if I get a letter and a refund, this is going to be an agonising wait.