Capitalisation

Will365247

My ex and i have a joint secure loan with the now defunct Welcome finance (don't get me started) the loan has been bought by another 'lender' and my ex has been out of work for several months and therefore can no longer meet repayments. I'm still in our home paying all of the mortgage and bills so cannot contribute as much as i would like to but the capitalisation is crippling us and our repayment is meant to be around £425 a month, about £417 of that goes on capitalisation (as we've missed previous payments when he was previously in and out of work) the loan is goin nowhere, it is practically never ending and he has written to them explaining his circs and they don't care (the new lender is Prime Credit) i think we owe about £4K and have offered £2K as a full and final settlement which of course they have turned down but i seem to recall reading something on MSE a while back about capitalisation and how it is essentially wrong and the debt is practically never ending and therefore putting people in continual hardship! If anyone has any ideas, advice, suggestions i would be so very very grateful.
Will

[Deleted User]

How are you defining capitalisation?

Brock_and_Roll

If assuming that by "capitalization" the OP means interest, then either the interest rate is over 100% (unlikely) or the balance (as a result of the accrual of late payments and charges is well over £4,000.


Reading between the lines I think it is the "capitalization" of all the fees and the late payments costs that the OP is querying the legality of....

foxy-stoat

They will not accept a lower payment as they have your property as security.

You should call them and ask for the settlement figure and go from there. If you cannot afford to settle the loan or make the payments then you have options, selling the property and buying a cheaper one.

Thrugelmir

Consider selling the property, clearing your debts and starting afresh.

Devon_John

I cannot offer any crumbs of comfort or advice. My mother and I took out a £10000 loan in 2004 - one of the worst things we've ever done. 12 years later still paying it off. 'Capitalisation' appeared on our earlier statements and we took this to mean 'interest'. For every £154 I paid each month, around £132 was debited as 'capitalisation'. At the time we did not appreciate or were not aware of the nuts and bolts and it was some time later we realized that we had signed up to paying £154.01 for 180 months. £27,000 plus. We were foolish. The payment amounts have gone up and down over the years (now £160.00) and we have paid back over £22000. In 2009 we were successful in claiming back PPI and recently given a further £400 which was credited to the account. The loan has been renamed as a mortgage, which was unnerving, and now Welcome has gone and we have Alpha Credit Solutions aka Prime Credit in its place who are changing the direct debit details and sending us dictatorial correspondence without a by- your -leave or thank you. Luckily we have never missed a payment but we still have £4000 to go, no savings, my mum is 83 and I am 63. I hope we can eventually get rid of this debt without further unsettling developments. Wouldn't it be nice if Prime Credit said that as we've paid back the loan and over 100% extra, they will write off the rest. Never mind, as these threads prove, there's always someone worse off. Will365247 good luck to you.

foxy-stoat

Devon_John wrote: »

At the time we did not appreciate or were not aware of the nuts and bolts and it was some time later we realized that we had signed up to paying £154.01 for 180 months.

At least your need the end of your road, but even back in 2004 the humble calcualtor would of told you that £154.01 X 180 = £27,721.88, less the £10,000 you borrowed and your interest would be £17,721.88.