Unknowingly sold a flexible rate loan

RMJ73

My partner took out a loan with Natwest 3 years ago, she was quoted an interest rate & a month repayment amount, in this case the loan was around £20,000, the monthly repayments over 7 years were about £360. She received a letter the other day informing her that due to the base rate increase she would now be required to pay £580 a month for the remainder of the loan...to me this appears to be another £7000 interest has been added to the value of the loan simply because Natwest have decided they can!

When she was first sold the loan the bank manager made no reference to the fact the interest rates were flexible & the repayments could change. Over the phone Natwest informed her that this sudden increase is due to them having previously "overlooked" making adjustments to the repayments in line with interest rate changes.

Has anyone experienced anything similar or has any advice, whilst she did sign the loans form I do feel she was mis-sold this loan in the first place?

jonesMUFCforever

What did she sign for?
Have you seen copies of the loan agreement?

How much was the loan for - around £20000 is not really good enough for us to help.

Why do you think the loan was mis-sold??

iolanthe07

You need to read the terms and conditions very carefully, as your partner should have done before she signed on the dotted line three years ago. She needs to get all her paper work together, be sure of her facts, and be persistent if she is to claim that the loan was mis-sold. Good luck.

dunstonh

Loans are generally bought, not sold.

simply because Natwest have decided they can!

Natwest have said it is due to interest rate rises. A totally valid reason. When interest rates fall back, then this will as well. Personal loans often do not react as quickly to interest rate rises/falls as mortgages. So, when an increase comes, it can be more than it would appear had it been done more frequently.

I do feel she was mis-sold this loan in the first place?

The agreement is the key here. Look at what she signed and see if it mentions fixed payments or fixed rate (it wont but perhaps you need to see that for yourself)

MarkyMarkD

This is like a lot of threads on MSE.

People "assume" that a personal loan has to be fixed rate, just because most personal loans are.

But not all are and there's no law which says that they have to be.

It's the buyer's responsibility to understand what they are buying.


Assuming, however, that the rate change is effective now and not retrospective, the OP could refinance the loan elsewhere - at a fixed rate if preferred.