help parents being scammed

jamesd

By still owing £13,000 a statement for a personal loan would normally mean that that is the total value of the remaining payments. The actual current debt value would be less because every previous payment would have reduced it a bit.

They would normally have a legal right to repay or make overpayments at any time. Assuming that their credit records are OK and there is reasonable income it shouldn't be hard to get a far cheaper loan to pay off this one. The current firm would be obliged to tell them the "early settlement" amount, valid for about a month after it is given. If too much was paid to clear it they would refund the excess.

rtho782

If the loan was made 15 years ago, correct me if I'm wrong, but it probably had front loaded interest applied, so early repayment would not be of any benefit.

jamesd

Front loading is just the normal way interest is calculated on personal loans and mortgages and it has no effect on early repayment.

A loan of this age wouldn't be back loaded, where the interest for the whole loan is calculated at the start and added to the capital owed, then all repayments are deducted from this capital. But it is common to show the total amount due to be paid over the remaining term on a standard front loaded loan and that could be mistaken for back loading.

This loan looks like a standard 25 year loan with 19% interest rate, not at all unusual for its time.

poppasmurf_bewdley

Sounds like they've taken the loan out over 25 years. So it's just like a mortgage.

Anyone who took out a mortgage of £200k 10 years ago at 9% over 25 years would pay back just over half a million quid!!!

Borrow £8k like your parents at the same rate over the same time scale and you would pay back more than £20k.

It's the consequence of high interest rates over long periods.

AndyPix

Caz3121 wrote: »

what was the term and APR for the loan...if this was a 25 year loan at 19% then the figures appear correct...there would be over £30k interest on top of the original borrowed amount

#shudder##