Secured Lending- Warning

lisacmitch98

Hi All

A word of warning -If you already have a secured loan with payment protection and are contacted by the company offering more money for no increase in terms please do not get caught out. I used to work (For 5 months) for a secured loan company and the company would telephone the customer after a year to ask them if they would like to borrow more money. A lot of people take up this offer, however it's not as great as it seems. Instead of adding the extra cash onto the existing loan, the company would raise a new loan with new payment protection. That new loan would be used to pay off the existing loan along with the interest penalty for paying a loan off early. In addition to the existing loan being paid, the remaining payment protection would be paid off (without rebate). Therefore the customer would have paid for 5 years payment protection which would then be cancelled and then they would be charged for a further 5 years protection. The company would be very cagey about telling the customer this and hence there were many customers that had shelled out in excess of £5000 for something they could not use. Also something to be aware of when taking out a secured loan is exactly how much interest you would be paying back. It looks quite a good deal sometimes but when you calculate the daily interest that is added to the loan, a lot of the time the customer ends up paying back almost twice what they borrowed.

cazziebo

yep - sounds familiar! Thanks for sharing that, Lisa.

the sad thing is, they get away with it because we trust these organisations. Part of the reason I got into a mess (and yes the main reason was my own stupidity) was companies calling me offering me more money for less of a payment. Didn't realise there was PPI and longer time to pay.

Thanks to this board and the lovely people on it I'm much smarter now