Challenging First Plus Redemption Figure

Scotty1230_11

Hi,

Looking for advice...

I took out a 25k secured loan over 25 years with First Plus in March 2005.

Balance left is 8086.47, but on asking for the redemption figure as I am looking to re-mortgage next year and get rid of the charge that First Plus have I was provided with a redemption figure of 18,459.12 (originally 20552.31 but with a rebate of 2243.19).

I have requested from First Plus how they have got this interest figure (rule of 78?) but would like to know if I can challenge this amount of interest as unfair following the 2010 changes to interest calculations?

Hope someone can advise,

many thanks,

antrobus

Scotty1230_11 wrote: »

Hi,

Looking for advice...

I took out a 25k secured loan over 25 years with First Plus in March 2005.

Balance left is 8086.47, but on asking for the redemption figure as I am looking to re-mortgage next year and get rid of the charge that First Plus have I was provided with a redemption figure of 18,459.12 (originally 20552.31 but with a rebate of 2243.19).

I have requested from First Plus how they have got this interest figure (rule of 78?) but would like to know if I can challenge this amount of interest as unfair following the 2010 changes to interest calculations?

Hope someone can advise,

many thanks,

Have you made some large one-off capital repayments to this First Plus loan?

Unless that was the case, I very much doubt that the 'balance' on a £25,000 25 year loan taken out in March 2005 would now be £8,046.47. £18,459.12 looks much more in the right ball park.

Scotty1230_11

Hi,

thanks for the reply. The balance stated is 8k, and this matches my credit file, so am assuming this is correct... We pay £270 a month for the loan so they've had over 32k off us already...

antrobus

Scotty1230_11 wrote: »

Hi,

thanks for the reply. The balance stated is 8k, and this matches my credit file, so am assuming this is correct... We pay £270 a month for the loan so they've had over 32k off us already...

Try the MSE mortgage calculator
http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator

£25k over 25 years at £270 per month is equivalent to an interest rate of 12.4%, which is, apparently, about right for a First Plus loan. It shows that the balance owed after 10 years would be more like £22k. I don't believe that the £8k balance would be correct.

First Plus have attracted a certain amount of criticism for their business model. See, for example, http://www.thisismoney.co.uk/money/cardsloans/article-2431010/FirstPlus-customer-left-paying-sky-high-rates-despite-record-low-base-rate.html

Or indeed, a number of threads here in MSEland.

CHR15

What did you agree to pay? i.e what is the APR of your loan?

A 25year loan for £25k repaying £270 per month is around 12.4%. This would cost over £56k over the term.

After 10 years, the capital remaining is over £22k.

Tap your figures in here and tell us where £8k sits

http://www.theguardian.com/money/loan-repayment-calculator-interest-rates


EDIT: Typical, always someone to get in first

Scotty1230_11

Hi the apr on the agreement is 8.9%, original loan was 31122, but 6122 was PPI which we reclaimed. Monthly payment is £271.90 and just checked it was 240 months not 25 years, so we are over half way through...

Thanks

bris

25k over 240 months works our at around 11.8% for your monthly payment and at 120 months still has just over 19k left to pay.


The 8.9% and 8k doesn't look right. Maybe the PPI has messed it up somewhere down the line.


Wont they have to knock off 10 years interest if you are settling early?

jonesMUFCforever

What happened to the PPI?
You say you reclaimed it - did you get a cheque or was it taken as an over payment on the loan and if so do you have a statement showing this?

Scotty1230_11

We got a cheque for the PPI so the loan should be based on 25k over 240 months at 8.9% apr.

Think the interest may have been calculated using rule of 78. Is that still legally applicable after the 2010 ruling?

Thanks

Nasqueron

Scotty1230_11 wrote: »

We got a cheque for the PPI so the loan should be based on 25k over 240 months at 8.9% apr.

Think the interest may have been calculated using rule of 78. Is that still legally applicable after the 2010 ruling?

Thanks

I am not an expert by any means but I believe you should have asked them to take the PPI off the loan and then recalculate the loan, by issuing a cheque they may have refunded the PPI but I bet they are still working on the basis of the original loan value with PPI on it

antrobus

CHR15 wrote: »

...EDIT: Typical, always someone to get in first

Confirmation is always useful.

Scotty1230_11 wrote: »

We got a cheque for the PPI so the loan should be based on 25k over 240 months at 8.9% apr. ....

Your original agreement might say 8.9%, but the interest rate on First Plus loans was variable, and First Plus are notorious for varying the rate upwards in line with BoE rates before 2007, and then not varying them downwards afterwards.

Scotty1230_11 wrote: »

...Think the interest may have been calculated using rule of 78. Is that still legally applicable after the 2010 ruling?....

I don't think that's the issue. Even if you borrowed £25k over 20 years, there is no way you would have repaid 2/3rds of the capital over the first ten years. It's your 'balance left' figure that needs to be challenged.