Advice regarding full and final settlement bid

kissinger

I would like some advice on how best to go about trying to clear a number of loans I am currently repaying. Here's the situation. I have two loans with the same company for around £5000 each, so I owe them around £10,000 in total. The company I am making the repayments to is not the company I originally took the loans out with. They went bust years ago and apparently sold all of their loans on.

What I am hoping to be able to do is make a full and final settlement offer to clear both loans. I currently have no way of rounding up the £10,000, but I should be able to raise around £6500, which I was hoping they might accept as a full and final settlement given that they most likely paid only a fraction of that to buy the loans, so would be making a decent profit in a short period of time, and because the terms of the original loan only require me to make very small monthly repayments (around £50 on each loan), and I get the impression from various correspondence and having talked to them that they're not too happy with the snail-like pace of repayment (not that they can do anything about it anyway).

What I'd like advice on specifically is:

1) How likely are they to accept a repayment offer of around 65% of the outstanding amount given that I've been making the repayments without any issues? Has anyone ever been in this situation before and what was your experience? I'm well aware that there's a distinct possibility that they will just say, 'No thanks, we'll just keep receiving the monthly payments thank you very much,' but I would rather get these loans cleared if there's even a slight chance of it because being in debt is not nice.

2) If they do reject my bid for a full and final settlement on the above terms but make a counter offer of, let's say, 80% of the full amount (so £8000) what would be my best option in terms of raising the additional £2000 given that I don't own anything near that value that I can sell and (presumably) have bad credit due to a prior default on a different loan (which I am now repaying on amended terms)? I.e., are there any banks likely to give someone like me with a default on record a small-ish loan given that I have a steady income and good credit otherwise? Would a credit union be an option? Anything like that...

Thanks guys.

McKneff

Well if you are not in default with either of these loans, they are very unlikely to accept any f & f settlement.


They have no reason to, they are getting their money, they are getting the interest, I wouldn't hold your breath

sourcrates

Hi,
How come your only paying £50 a month each on loans of 5k ?

Have you ever defaulted on these accounts ?

Borrowing more money to pay off existing debt is not a good idea at all, if, you were accepted, with the credit record you describe, the interest charged would be massive, and would get you into further unnessessary debt.

bennyhill_2

Need more details as above in order to give truly 'valuable' info.

Vermillion

Erm hate to burst the illusion here, but you practically need to be in serious financial straits to get the F&F and it can take over a year to even start to make any headway. As Sourcrates has said you are up to date and you make this point in the opening statement in your numbered 1 paragraph:-

Quote:-
1) How likely are they to accept a repayment offer of around 65% of the outstanding amount given that I've been making the repayments without any issues?

kissinger

Nope. Never defaulted on either of these loans, never missed a payment or been late either. It's actually closer to £60 a month on each, but that's still small. No particular reason why they're so small. I suppose that's just what the terms are.

So would you guys say it's not even worth a try because it's that unlikely? Is my best bet to just pay off one of the loans in full and then start saving to pay the other off?

redux

What is the interest rate?

fatbelly

redux wrote: »

What is the interest rate?

zero interest

https://forums.moneysavingexpert.com/discussion/5304976

redux

fatbelly wrote: »

zero interest

https://forums.moneysavingexpert.com/discussion/5304976

Thanks. Actually I did see that, but hadn't realised now that it was the same person.

In that case advice would be not to worry about speeding up payments, but on the other hand perhaps there might be some scope for a discount to be offered for settlement, though probably not as much as the OP first suggested.

Playing with an online loan calculator, it looks like there is about 7 years to go. If there were other people paying the same total over the same term, but with interest included, equivalent loans would be for example:

£4500 at about 3%
£4000 at about 6.5%
£3750 at about 8.6%
£3600 at about 10%
£3250 at about 13%

So I'd surmise that 15 to 25% would be the likely discount range to hope for.

Maybe try to negotiate one to be settled now with a discount and the other would be speeded up. But don't worry if it won't happen.

kissinger

redux wrote: »

What is the interest rate?

As fatbelly said, the interest rate appeared to reduce to zero after a recent Change of Agency, but I strongly suspect that that was some sort of colossal typo on their part and I will have to verify, because I can't think of any reason why they would willingly reduce it to zero, essentially giving up a claim to money owed. Originally it was 7%.

Stevie_Palimo

You can offer what ever you want as a !!!!!! to them and I've seen Companies accept less than 50% before with people I know and one was a bank loan and overdraft however it was with a collection agency.