Loan Agreement

Heather26

Hi,
I'm new to the site and not to sure what response I will get back but any advice would be great. I took a £500 loan out in dec 2010 however I was still repaying until recently. After looking through my history I have paid in interest £1499.33 and still had a remaining balance of £185.05. I looked at my t&c's and it states:
"Total Charge for Credit - £361.65 , which comprises of a) total interest of £361.55 and b) debit card fee of 10p. We are required by law to calculate the Total Charge for Credit on the assumptions that an amount of credit equal to the Credit Limit is provided in full on the date of this Agreement and is provided for a period of one year beginning with that date and that the credit is repaid in 12 equal instalments at monthly intervals one month after the date of this Agreement".
18 months after I took out the loan they changed the t&c's - "
"We are required to provide you with an example of the total amount you would pay if you were to have a credit limit of and borrow £500.00 and repay that amount, together with interest, over the period of one year by 12 equal monthly payments, assuming there was no change to the interest rate during that period. On these assumptions the total amount payable would be £861.65 (that is 12 monthly payments of £71.80) and he annual percentage rate of charge would be 199%APR".
I contacted the company to complaint as I feel the I have overpaid in interest and also never received the change in t&c's. The adviser stated that I was only making minimum payments and that this was not reflective on total charge of credit but there was an error on there system towards my payments so I only had 2 payments to make rather than 4 and the remaining balance was paid as a goodwill gesture, account closed. I still don't feel this is right, if the original agreement had stated the amount the calculation of credit was based its not much of a difference so would have paid it.
My question to anyone that can help me is - Am I right to complain?

jonesMUFCforever

We need more information.


Who did you borrow from?
The amount borrowed - the advertised APR and over how many months/years?


What type of borrowing is it? - Loan, credit card agreement,catalogue or store card??

forgotmyname

Missed or late payments?

Heather26

It was a £500 loan I took it out with Flmquick who have stopped lending.
The original terms shows: Interest Rate Per annum (Variable) - 199% and doesn’t show a term or the payment amount the total cost of credit is based on.
18 months after this the new t&c’s states the total amount payable would be £861.65 (that is 12 monthly payments of £71.80) and the annual percentage rate of charge would be 199%APR.

Payments were automatically taken from my account. Never missed a payment but didn’t know that the payments taken were only a minimum payment. I stupidly thought that the payments reflected the original total cost of credit.
I understand now that it was going to take longer paying the minimum and am happy they settled the remaining balance but bit annoyed they never prompted me to make a higher payment during the 3 and a half years.

poppasmurf_bewdley

Heather26 wrote: »

It was a £500 loan I took it out with Flmquick who have stopped lending.
The original terms shows: Interest Rate Per annum (Variable) - 199% and doesn’t show a term or the payment amount the total cost of credit is based on.
18 months after this the new t&c’s states the total amount payable would be £861.65 (that is 12 monthly payments of £71.80) and the annual percentage rate of charge would be 199%APR.

Payments were automatically taken from my account. Never missed a payment but didn’t know that the payments taken were only a minimum payment. I stupidly thought that the payments reflected the original total cost of credit.
I understand now that it was going to take longer paying the minimum and am happy they settled the remaining balance but bit annoyed they never prompted me to make a higher payment during the 3 and a half years.

In the whole of my adult life I have never, ever, had a loan company say to me "Why don't you increase your payments?"

If you borrowed £500 at 199% APR interest, you needed to pay back an horrific amount. Even over one year, that's £1500 to pay back at £125 per month.

Heather26

Of course but the reason I say this is because it states in the agreement “Periodically we will prompt you to make payments which are higher than the minimum payments set out above to ensure that the agreement is repaid within a reasonable timescale”.
Based on your calculation I still don’t really understand why they quoted the Total Charge for Credit - £361.65. Should they not have legally provided the payment amount which the calculation was based upon in the original agreement rather than adding it when they changed the t&c’s?

PeacefulWaters

Not having access to the loan agreement and supporting documentation, it's impossible to answer your question.

poppasmurf_bewdley

If you take the £500 you borrowed, plus the £361.65 interest you quote, that makes £861.65, meaning a payment of £71.80 per month over a 12 month period.

Is that what you paid in the first 12 months? Or did you pay less? If less, then you must have known the period of the loan was longer than 12 months.

You have not given us anywhere near enough information to enable anyone to supply a satisfactory answer to a question we are not sure about.

Heather26

That’s exactly what it states in the change of t&c’s but should they not have included that this was based on a monthly payment of £71.80 over 12 months in the original agreement rather than just stating the total cost of credit £361.65 over a 12 month period?
Unfortunately no, I never really kept track of the payments I just allowed it to be taken from account thinking that they were taking the minimum amount which equalled this sum (my own fault really).
I am not too sure what other info you would like as the contract didn’t include much. I’m probably lucky to have got the remaining balance waived tbh. Thanks for the responses though J

Lioness_Twinkletoes

Are you seriously saying you paid a £500 loan over 3 YEARS and never thought to query it??

tell_it_how_it_is

I think your situation highlights a lesson learned for yourself, and hopefully heeds as a warning to others about how easy it is to wave goodbye to hundreds or thousands of pounds.

People end up so blinkered with getting hold of the money in the first place that they take no notice of the terms and how much it is ultimately going to cost them - which is where they need to start before working backwards and deciding if it's a good idea after all.