long term secured loan

clingfilm

Hi I really hope someone can help me on this. I'm desperate and depressed over it.
Back in 2006 I took out a secured loan with a company called London Personal Loans - LPL/ SPPL (it has changed names/hands several times and is now known as Acenden).
The original loan was for 25K with repayments of £270 pm over a period of 240 months. Yes I know its crazy, I was so desperate at the time and thinking i would be able to sort myself out quickly I didnt read the very small print on the agreement properly.
Basically I have now realised my massive mistake.The charge for the credit is £40,030.40..OMD.
Can anyone advise me, is this even legal? Is there anything I can do to reduce the outrageous interest. The agreement states I declined PPI. I dont have good credit.
I would be very grateful for any help.
Thanks

Voltaire7

The loan is secured on your property?

Gaz83

Of course it's legal. A lender can offer whatever terms it wants. Prospective customers can choose whether to accept them. You signed up for it - you accepted their terms.

It would have been apparent without reading the small print - £270 x 240 = £64,800. It's basic arithmetic. Add on a couple of hundred pounds in fees and that's where the £40k charge for credit comes from.

You don't really have many options. You could see if you could refinance with another lender at a lower APR. But after 9 years you'll probably find there's still upwards of £19k outstanding on the capital - most of your payments over the last 9 years will have been on interest. You'll struggle to get a loan of that amount with excellent credit, never mind poor credit.

I would think you're stuck with it. Could you overpay a little to pay it off quicker? Even an extra £50 a month would make a massive difference.

andyfromotley

What APR is the loan, given the amount and the repayment timeframe I'm not sure the interest charge is that outrageous??

Gaz83

I would think about 12.5%.

andyfromotley

In 2006 the base rate was 4.5% you got a secured loan at 8 points over the rate? It seems about right. You of course will pay quite a lot of interest on this loan, just as you will with a mortgage, the numbers can appear quite staggering when you look at them on paper. Its hardly fair to describe interest and the total amount paid over the term of the loan as 'small print'!

So what now is the problem? If you can't afford this loan then you need to go to the DFW board, post details of your finances on their and people will help you to try and sort out your finances.

Is it that you don't fancy paying back the interest? In which case all you can try and do is refinance at a lower rate (perhaps by remortgaging?) if you have sufficient equity and a good credit history. This may be a decent option as rates are very low right now, but you will of course still have to pay interest no matter what you do.

If you are unable to refinance then overpayment is the way to go.

On the facts you have given us you were certainly not ripped off in any way imo. hope this helps, andy.

clingfilm

Thanks everyone for your responses.
Really the problem is that I cant believe the interest is nearly twice what I borrowed in the first place. Its extortionate. I guess I was hoping there was something wrong with the agreement so I could contest it.
Overpayment is not an option right now. My husband suggests an IVA but I dont think thats a good idea

clingfilm

Yes the loan is secured against my house. And the APR is variable at 12.4%

[Deleted User]

clingfilm wrote: »

Its extortionate.

It's not though, is it? You just opted to pay it back over a very long time.

andyfromotley

can you afford to pay the loan?

If you can then just carry on. Honestly your loan is ok. i know you shocked by the interest but just dig out your mortgage paperwork, look how much interest you are paying on that!

Of course it seems high now because rates are very very low, bot in 10 years time if rates are up at 8% base rate your loan will look cheap!

As i said, if you can't pay hop over to the Debt Free Wannabe board for advice on how to deal with it all.

Gaz83

clingfilm wrote: »

Thanks everyone for your responses.
Really the problem is that I cant believe the interest is nearly twice what I borrowed in the first place. Its extortionate. I guess I was hoping there was something wrong with the agreement so I could contest it.
Overpayment is not an option right now. My husband suggests an IVA but I dont think thats a good idea

Surely you're able to do a bit of simple arithmetic, with a calculator?

You signed up to pay £270 240 times. £270 x 240 = £64,800.