Please advise/ help.

Swine_2014

Morning...
In January 2011 I took out a £22k loan to buy a Narrowboat to live on.
The rate 6.9% and fixed over a seven year repayment term. I was paying back £320 a month.
In 2013 I foolishly added a extra £3k to pay a credit card off.
I upped the repayments to £380 a month and thought nothing off it.
Recently I have been keeping a eye on my repayments and it seems Lloyds have doubled my rate to 13.9% on the whole loan when I took the extra £3k.
Had I known this I would not of took the extra loan out.
I have just checked and I pay £380 a month, £205 this month went to loan and £175 was interest.
That means I am paying about 46% interest and at that rate it will take me another seven years to pay loan off..

I need to get this sorted. How have they upped the interest that much, they didn't tell me my interest rate was doubled at the time of extra loan, my seven year loan has been changed into a 14 year loan.

Any advise would be great

Pixie5740

When you borrowed the additional £3,000 it's likely that what happened was that you took out a brand new loan of £3,000 plus whatever the settlement figure of your existing loan was. The new loan was at 13.9% APR.

What does the paperwork for the second loan say the interest rate is?

Foxy-Stoat_3

I would check the new agreement very carefully, the one that you have signed and accepted, it will state the terms of the additional advance, repayment terms and interest.

Report back if Lloyds have done something that you have not signed up to and agreed.

Swine_2014

I will have a look.
Last week I spoke to Lloyds and the rate was 13.9%. And yes you are correct, they added the 3k to the other one and in effect ripped up the previous loan agreement which was not explained to me.
If my rate is 13.9%, how are they taking almost half every month?
That's what concerns me

Foxy-Stoat_3

Swine_2014 wrote: »

If my rate is 13.9%, how are they taking almost half every month?
That's what concerns me

Half of what?

What concerns me is that you didn't read what you have signed up to.

Your not paying 46% interest, your paying an APR of 13.9%. Your capital repayment will increase and interest payments decrease during the length of the loan, thats how it normally works.

Swine_2014

Half of my repayment is interest every month. I paid £380 like I do every month. This month £205 was taken off the loan, where's the other £175 going?

Foxy-Stoat_3

Swine_2014 wrote: »

Half of my repayment is interest every month. I paid £380 like I do every month. This month £205 was taken off the loan, where's the other £175 going?

Thats the interest, say you owe £18,000 in January, * 13.9% APR = £2502/12 = £208.50.

So February you will owe £18,000 - £205 = £17,795, * 13.9% APR = £2473/12 = £206.08

So your interest will decrease and your capital repayment will increase. Unless the lender works out the interest on a daily basis but you get the idea.

Swine_2014

Man that's crap!
I need to go see them and get it sorted, taking a extra £3k should not of put a extra four years on my loan

Foxy-Stoat_3

Swine_2014 wrote: »

Man that's crap!
I need to go see them and get it sorted, taking a extra £3k should not of put a extra four years on my loan

If by signing up to the £3,000 advance and changing the interest rate from 7 to 13% and only increasing the repayments by £60 then yes it will put years on the loan.

Before you took the advance your interest was less than £90 a month on the original debt, now its £175. Your additional £60 doesn't even cover the additional interest.

Best thing you can do is overpay the loan as much as you can or find another lender with a better rate.

What does your paper work say, it should state the amount borrowed, monthly repayments, length of the loan and total amount to be repaid including the interest.

Swine_2014

Cheers guys, any recommendations on another provider please?

Swine_2014

If i find another loan and pay £15k off, this would leave me with about £1k to pay.
Would I be able to reduce my monthly repayments to the old loan or would I still have to pay £380?