Can I not accept this loan?

Plec

I am going to have some home improvements done, but the company offered substantial discount if I took out a loan with Shorebrook Bank. I agreed to this to get the discount, but the sales rep stressed to repay the loan over 8 instalments rather than the 5 year fixed term, to save hugely on the interest. My question is do I have to accept the loan and repay over 8 months, greatly reducing the total interest, or can I repay the total amount within 14 days of the bank paying the improvement company avoiding any interest. ? Any advice greatly appreciated

tonycottee

First of all, you didn't get a discount. These companies just artificially inflate their prices to make it look like they are giving you a discount. If you get quotes from local firms, I'm sure you'll find them much cheaper.
Secondly, what does your contract say? I assume you have a copy?

Cycrow

you will have to check the loan contract to see if you can overpay or clear it early.

but there is usually some cost involved in doing it, so it might not be interest free.

but as tonycottee said, its likely an over inflated price to begin with to get you to take out the finance

Apples2

From their website

Home-improvement finance questions that need answers?

We hope you’ll find the answer in these Frequently Asked Questions (FAQs):

How will Shawbrook treat me as a home-improvement finance customer?
Our teams have experience of all kinds of personal lending.
We are a responsible lender, and we will check that you can afford the loan before we agree to it. This will include a detailed review of your income and expenditure.
We promise that we will:

• Act fairly and reasonably in our dealings with you.
• Help you understand the financial implications of your secured loan.
• Give you high quality service.

What is a home-improvement finance loan?
This loan is not secured on your property. But if you don’t keep up the agreed loan payments, we may ask a court’s permission to obtain a charge on your property which we may enforce to recover the debt.
Shawbrook will only do this as a last resort, if all other solutions have been fully exhausted.
Borrowing money is a serious matter. You need to think carefully about whether you can afford the payments over the full term of the loan (not just during any introductory period when you may pay a lower rate of interest).

Is the interest rate on my home-improvement finance a variable rate?

• Your home-improvement finance will have a variable interest rate, and that rate can go up or down (see third bullet below).
• Your home-improvement finance may have a fixed interest rate for an introductory period. But once this introductory period is over (typically after three-to-six months), the loan goes onto a variable interest rate.
• The interest rate on your home-improvement finance may change if there is any change in:
  • The costs of funds we use in our lending business (or we reasonably expect that the costs of funding are about to change).
  • The laws, or guidance of any regulatory authority that regulates our business; or a code of practice that we comply with, or intend to comply with.

We will give you not less than 10 days written notice of any change to the interest rate, or notice in any other lawful manner.

Can I settle my home-improvement finance early?
You can settle your home-improvement finance at any time.
You can request a settlement figure, and this figure will be valid for 28 days.
We will charge you 1 month additional settlement interest, and this will be shown in your statement.

Who do I contact if I have questions about my home-improvement finance?
Our customer services team can help with any question about your home-improvement finance account. You can call them on 0845 600 7680 (weekdays only 9.00am to 5.00pm).

What if I can’t make a payment on my home-improvement finance?
We are a responsible lender, and we will always deal with you honestly and sympathetically.
But please tell us immediately if you can’t afford the payments on your home-improvement finance.
Tell us before you miss any payments, and we’re much more likely to be able to help.
You can contact us on 0845 600 7680.

Basically, ring the number above and ask before signing as you are asking about cancelling as opposed to settling early.

Plec

The contract I am being asked to sign states that the bank will forward the loan amount to the company on completion of the work being carried out to my satisfaction. It then says I have a right to cancel within 14 days and will incur an admin fee. I can also clear the loan at any time as stated above. Does this mean that if I cancel within 14 days I only have to pay the loan plus admin fee, and the original company can do nothing about it and have to do without their cut from the bank? I can't see anywhere anything to do with paying half the outstanding balance for each of 8 months as stated by the sales rep. Unfortunately I am not at home with access to the original paperwork at the moment.

tonycottee

Plec wrote: »

It then says I have a right to cancel within 14 days and will incur an admin fee. I can also clear the loan at any time as stated above. Does this mean that if I cancel within 14 days I only have to pay the loan plus admin fee, and the original company can do nothing about it and have to do without their cut from the bank?

That sounds about right. I had a similar agreement when buying a car. I cancelled after 7 days and had to pay a small amount of interest which was calculated daily. No admin fee though. Do you know how much it is?

Plec

I think the admin fee is £175 but would need to check. Still a huge saving on loan repayments.