Secured Loan early repayment advice

dy44

Hi

Please would anyone be able to offer me any advice on the below.

I have come into a sum of money and wish to pay off a secured loan I have early, the current balance is approx. £9000 it has 28 months left to run. Upon enquiring for an early settlement figure I have been advised it is £9000 when enquiring as to regards to a rebate on the interest for paying it off over 2 years early was advised there isn't one and the balance now is what I have to pay, surely this isn't correct as I have read that the interest should be stopped as such from the day it is paid off and they charge me an early repayment charge which I am aware of and is 30 days interest.

The loan is not with the company I took it out with as they sold all there loans to the company I am now with, the old company used to call or write to me stating if I increased the payments monthly I would save money by paying it off early and save money on the interest I would pay, the new company state the terms haven't changed but refuse to acknowledge the part where paying it off early entitles me to a rebate on the interest as offered by the company I took the loan out with.

Any advice would be greatly appreciated.

National_Debtline

Hi dy44


Do you know whether your loan is/was regulated by the Consumer Credit Act? If so, you should have an entitlement to settle the balance early and to seek a rebate in this event. This would not be affected by a change in the debt's ownership since you took it out. More generally speaking, you should be able to hold the current lender to the terms of any original agreement entered into. I don't know how you have gone about asking for this information so far, but I would recommend making a written request for the early settlement figure.


Dennis
@natdebtline

foxy-stoat

When I was looking into a secured loan and read the small print on the credit agreement I decided against it as there seemed to be too many "unfair" terms, I remember that it wasnt regulated by the CCA.

You should be looking at the original credit agreement to see what it says about early settlement and not what you read on the internet.

You would probably be better off putting the £9000 into the highest interest account you can find and transfering £322 each month a few days before the loan payment is normally taken out and forget about it.

dy44

Hi Dennis

Many thanks for the reply.

It was a fixed sum loan agreement regulated by the consumer credit act 1974 and does give 3 examples of what I am likely to repay if I pay the loan off early at certain periods I also have letters from the original company offering a reduction in the amount I have to pay if I increase my payments etc.

I have spoken to them twice on numbers on there literature but the 2nd person just stated what the 1st had said also, I don't get the sum of money for about 3 weeks so will write to them and see what they say.

dy44

Hi Foxy-stoat

As in my previous reply it was regulated under CCA, if I get nowhere I will probably take your advice however will pursue now on a point of principle as why should I pay them £9k over the next two years when I could only have to pay for arguments sake £7k and leave the other £2k in a higher interest account.

National_Debtline

dy44 wrote: »

Hi Dennis

Many thanks for the reply.

It was a fixed sum loan agreement regulated by the consumer credit act 1974 and does give 3 examples of what I am likely to repay if I pay the loan off early at certain periods I also have letters from the original company offering a reduction in the amount I have to pay if I increase my payments etc.

I have spoken to them twice on numbers on there literature but the 2nd person just stated what the 1st had said also, I don't get the sum of money for about 3 weeks so will write to them and see what they say.

OK, thanks for confirming. I wouldn't be at all surprised if the people you had spoken to on those two occasions simply failed to understand your question properly and just quoted the outstanding balance showing on their screen. Unfortunately their training will not always stretch to the finer points of consumer credit legislation.


Dennis
@natdebtline

dy44

Thanks Dennis

That was my thought when I spoke to them both I will write to them and see what they say will repost if any issues further down the line.

jonesMUFCforever

A rebate will only be paid back if the interest has been front loaded.
If not, many loans including secured ones work on the principle of charging interest daily and debited monthly.
So at the begining of a loan you pay a lot of interest then as you make repayments the interest reduces.