My bank can't find my loan agreement and I'm disputing, it what can I do.

Rob_1

In 2006 I took out a business loan for 30K for what I was pretty sure was for 7 years. I remember two years ago asking my bank for the remaining amount and term and they confirmed that it would be repaid by June 2013. June came and went and my direct debits still continued to be taken so I asked again about the end date only to be told it was now 2016.

As you can probably tell I have lost the original paperwork otherwise I would know what the terms were but I have worked out that if I multiply my monthly payments which have remained constant over the course of 7 years at an interest rate of ~5% which I'm pretty sure is what it was in 2006 I would indeed have repaid in 7 years. If I end up paying 10 years worth of the same repayment it would mean an initial interest rate of 13% which is way too high.

Anyway I finally got round to the bank as I have moved away from the area and you cant just phone the central number or branch to see the original copy of the agreement but they say it no longer exists.

Where do I stand, I've paid over what I thought I originally signed up to and yet now looks like I will be paying for another 2 years as the bank doesn't have the original paperwork any more.

Any help greatly appreciated.

Roberto.

CherlokHomes

How much was your direct debit for?

longtermplanner

Bank base rate was about 4.75% to 5% in 2006. An unsecured loan would definitely have been more expensive than that!

jacques_chirac

The BoE interest rate was around 5% in 2006, as was the LIBOR - I would be surprised if you were able to get a loan at such a (comparatively) low rate.

Edit: Great minds!

iolanthe07

Business loans are sometimes sold on a 'flat' rate basis, as usual consumer law doesn't apply. If this was the case, you need to double it to arrive at an approximate APR.

Rob_1

CherlokHomes wrote: »

How much was your direct debit for?

Thanks for your reply guys, my DD repayment is currently £450 per month.

CherlokHomes

Rob_1 wrote: »

Thanks for your reply guys, my DD repayment is currently £450 per month.

Around 7% APR sounds about right.

Rob_1

Sorry are you saying that 7% APR is what I should have expected to pay or that based on my monthly payment that is what it has worked out to be?

AMILLIONDOLLARS

The bank has to send you a copy of your loan agreement, write to them requesting a copy. How can they collect on a loan if they have no paperwork? They can't, contact the The Financial Conduct Authority, link below.

http://www.fca.org.uk/

Derwent

If they can't produce even a copy of the agreement I'd cancel the DD and stop paying it ! They can't enforce a contract that apparently doesn't exist ! I imagine if you stop paying they will find a copy pretty quickly.

jacques_chirac

Derwent wrote: »

If they can't produce even a copy of the agreement I'd cancel the DD and stop paying it ! They can't enforce a contract that apparently doesn't exist ! I imagine if you stop paying they will find a copy pretty quickly.

Really bad advice - all that will do is screw up the OP's credit file.

OP, if they cannot produce the original loan agreement the likelihood is they will be able to produce a reconstituted version - this is sufficient for a court to enforce the debt. Request this in writing from them.