long term secured loan

fierystormcloud

What a horrible, nasty shock! :eek:

I have a friend who this happened to: she took out a £30K loan around 2007 (secured,) and she decided to sell her house (luckily she had £50K equity,) so she could leave the country. She intended to pay her debts off with the equity.

Then she found, (after 3 years of paying £250 a month,) that her loan amount left was £33.5K! She was horrified, as she had paid nine grand off and the amount had gone UP by three and a half grand! She was expecting the amount to have gone down by about five or six grand.

About 18 months in, the loan (which was originally lent to her by a leading supermarket's loan section) was bought by another company, and they were dreadful to deal with.

I know everything is probably all present and correct so to speak, but still, it's pretty shocking that it's gone up so much like this!

Not sure what to suggest other than to keep paying. Taking out a more massive loan, with a view to paying this off, seems like a dreadful idea.

Jon_B_2

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

Really?


REALLY?


Seriously, checking the APR and doing a simple calculation of 270 x 240 is not a matter of small-print. It's called due-diligence. Not to check was lazy and to try and call foul play is outrageous.


It's a rubbish situation to be in, but you only have yourself to blame. It sounds harsh, but it's really as simple as that.

Pixie5740

The longer the term of the loan the more interest you pay. Simple. If you look at your mortgage, how much you initially borrow and how much you end up paying back at the end of the term you'd be in a similar ballpark.

OP, if you hadn't take the secure loan what would have happened? What did you spend the money?

Before entering into an IVA think very carefully about the consequences and speak to one of the debt charities like CAP or Step Change.

hyubh

I speak only for myself, but taking out a £30K personal loan? Now that's something I wouldn't 'naturally expect' someone to do (I can only think you live in wealthy circles?) - and then once the decision is made to take out such a beast, to not be clear on its terms...?

fierystormcloud

hyubh wrote: »

I speak only for myself, but taking out a £30K personal loan? Now that's something I wouldn't 'naturally expect' someone to do (I can only think you live in wealthy circles?) - and then once the decision is made to take out such a beast, to not be clear on its terms...?

You would be amazed at the amount of people who have taken out mammoth secured loans in the past, (and more recently.) And it's nothing to do with living wealthy circles either. (And someone who is wealthy, wouldn't need to take a £30K loan out anyway!) Many people take them out as consolidation loans, over 20 or 25 or 30 years. Crazy I know.

It seems like a good idea at the time, but taking such a high amount is a bad idea. As many people - including my friend, and the OP - have discovered. Some carry it around like a ball and chain for many, many years.

chesky

Long-term loans, like mortgages, are always a bit of a shock when you calculate how much interest you're paying. We took out our mortgage in the 60's and after about ten years, reckoned we'd bought about three bricks of our house.

enthusiasticsaver

Unfortunately this is how banks make their money. Any of us who have had mortgages have seen the total charge for credit as being many many times more than the original debt. If you take a large loan out over a long period of time then the interest you now realise you are paying is actually not that much out of the ordinary.


You have little choice really other than to keep paying it particularly as it is secured on your property. Not a good situation to be in but just take it as a lesson learned and concentrate on paying it down asap. If you are unable to pay it then either approach stepchange or the lender but bear in mind that they have more leverage than an unsecured debt because it is secured on your home.

dealer_wins

Funny how people start to think about total cost of borrowing years after taking out the loan.

And then question whether its legal as well lol

halifax71

It's all been said above really, the amount go repaid over such a term will be 2-3 times the capital.
What I would ask is whether your variable apr loan has had its apr increased since 2006 - I.e. What was it at inception, and what is it now? If it's increased ask the lender what costs they have incurred, in addition to those that were in place when you took out the loan, that have impacted your loan.

wacko911

fierystormcloud wrote: »

Then she found, (after 3 years of paying £250 a month,) that her loan amount left was £33.5K! She was horrified, as she had paid nine grand off and the amount had gone UP by three and a half grand! She was expecting the amount to have gone down by about five or six grand.

Is that even possible, would that not mean than in another 3 years she would owe £37K as the interest must be greater than the repayments?