Added interest on to 8 year loan because of the date taken from the account

sdoherty1000

In September 2007 we took out a £20,000 loan with Blemain Finance at an agreed amount of £322.34 per month £30,944.64 in total. I have looked over my credit file and it says we still owe £2365.00 to finish paying off the loan. At the end of this month we would of made 91 payments ( £29,332.94) which would indicate I have an outstanding balance of £1611.70! So taking into account the £2365 minus this months payment of £322.34 leaves £2042.66p leaves a deficit of £430.96. I rang them today and they told me its added interest because of the date they take out the direct debit ie the 20th every month. If we had arranged at the start to be taken out on the 3rd for example then the interest would not applied- Can someone tell me if this is legal? a) we were never informed of the added interest and b) if I have a contract stating £30,944,64 can they legally ask for more money?

I hope this post isnt to confusing for you to understand

Thanks

xHannahx

Looking online it seems they increased variable interest rates twice in 2008 and once in 2009. If you are on a variable rate this will mean total repayable increases. The total repayable is only really valid if the rate remains the same for the whole term which rarely happens.
Interest is calculated daily so paying earlier in Month will reduce interest.
Their tariff of charges is daylight robbery in my opinion, if you've had any of these, all being interest bearing will increase your total repayable.

http://www.blemainfinance.co.uk/customerservice/Blemain%20Finance%20Tariff%20May%2710%20-%20BLF0403.pdf

boo_star

xHannahx wrote: »

Looking online it seems they increased variable interest rates twice in 2008 and once in 2009. If you are on a variable rate this will mean total repayable increases. The total repayable is only really valid if the rate remains the same for the whole term which rarely happens.
Interest is calculated daily so paying earlier in Month will reduce interest.
Their tariff of charges is daylight robbery in my opinion, if you've had any of these, all being interest bearing will increase your total repayable.

http://www.blemainfinance.co.uk/customerservice/Blemain%20Finance%20Tariff%20May%2710%20-%20BLF0403.pdf

What, specifically, are you looking at on that charging list in reference to the loan?

sdoherty1000

Ill be honest, I assumed a loan of 96 x £££££ meant that you paid an agreed sum of 96 payments and that was the end of it, I didn't know that they can add interest on top regardless of when the dd are paid. I will be sending off for the credit agreement come Monday to see if it states anywhere that this is the case. I think we have paid back more than enough and with the end in sight it was nice to think "hey only 6 more payments due then we are £322 better off a month"

xHannahx

boo_star wrote: »

What, specifically, are you looking at on that charging list in reference to the loan?

Could be anything. The op would have to look through if they have incurred any of the listed items.

sdoherty1000

From what she said on the phone, No other fee's have incurred other than the added interest due to the date they received payment. If I sign a contract stating 96 months @ £322.34 then they are also signing a contract to accept 96 payments of £322.34. Adding £430 on top just seems like a kick in the knackers (excuse my french)

boo_star

xHannahx wrote: »

Could be anything. The op would have to look through if they have incurred any of the listed items.

But you mentioned variable interest rates, so how do they fit in with the pdf?

xHannahx

boo_star wrote: »

But you mentioned variable interest rates, so how do they fit in with the pdf?

They don't. They are two completely different things.
An increase in variable rate will result in paying more.
The pdf lists their admin fees which are rather high and may also be a contributory factor in the balance being higher than expected if any if those items have been charged.

xHannahx

sdoherty1000 wrote: »

From what she said on the phone, No other fee's have incurred other than the added interest due to the date they received payment. If I sign a contract stating 96 months @ £322.34 then they are also signing a contract to accept 96 payments of £322.34. Adding £430 on top just seems like a kick in the knackers (excuse my french)

No they will have terms and conditions making you liable to pay that £430. They are likely to whack on High admin fees if you don't.

ViolaLass

sdoherty1000 wrote: »

From what she said on the phone, No other fee's have incurred other than the added interest due to the date they received payment. If I sign a contract stating 96 months @ £322.34 then they are also signing a contract to accept 96 payments of £322.34. Adding £430 on top just seems like a kick in the knackers (excuse my french)

Does the contract mention a variable rate of interest?

redux

I suppose there may be something in what they say, but I'm wondering why they set up the direct debit for that date. If you'd been paying by standing order the date would be under your control, but a direct debit is operated by them.

I did some playing with an online loan repayment calculator.

Think of it this way. If the whole loan was paid a whole month late every month, this is the same effect as skipping the first month, adding £196 in interest. So then there is £20196 to pay. If the payment is still set at the original monthly amount rather than slightly increased, this new loan of £20196 will take about 97.6 months, and cause about £310 more interest. So £506 more overall. So anything up to that seems to be possible for part of a month 'late'.

Did they ask you what date in the month to take payment, for example 2 or 3 days after your salary would arrive in your bank account?

I'd complain to them that it seems that either they set up the wrong direct debit date at the start, or they failed to explain the consequences of choosing a few days later to you, and they ought to waive that part of the repayment.