Dispute over front loaded interest

Jennye1410

Some advice please...
We took out a loan for £25k 1 year ago with an interest rate of 5.2708%, through Tesco.
However we were quite shocked to receive our first annual statement which shows a balance of £29,792.40!
This is due to the loan being front loaded with interest which I have just discovered by calling the call centre. This was however never made clear in the credit agreement that we initially signed. Nor at any point when taking out the loan. I would never have intentionally signed up to a front loaded interest loan, as had planned to pay off the loan early, which is pointless with a front loaded loan. I have called the call centre today, who apologised but said there is nothing they can do.
I feel quite angry that I have taken out this loan under false pretences.
What can I do???? Ideally would like some sort of compensation or to have the loan switched to a regular loan paying off the interest and the loan at the same time, is this possible???

Carrot007

They do this just so you are aware of how much is owing in total.

If you request a settlement figure it will be lower and they should only report the settlement figure to credit agencies.

TonyMMM

It's not front loaded it's how interest statements work.

Your statement shows how much you will pay back over the term - if you ask for a settlement figure and pay it off earlier, the interest will be less.

societys_child

Front loaded interest?

[Deleted User]

Jennye1410 wrote: »

Ideally would like some sort of compensation or to have the loan switched to a regular loan paying off the interest and the loan at the same time, is this possible???

There will be no compensation, but at least you now know you have a regular loan.

All's well that ends well.

Shakin_Steve

Well...I've had a few loans in my time and I've never had a statement that shows the amount owed being higher than the amount borrowed. The running balance just just goes down very slowly at the beginning of the loan as the interest is a high proportion of the instalment paid. The only place I've ever seen the full amount to be repaid is on the agreement.

Shakin_Steve

This is all I can find:

https://yourcommunity.tescobank.com/t5/Loans/How-is-interest-charged-on-my-loan/ta-p/748

PeacefulWaters

Jennye1410 wrote: »

We took out a loan for £25k 1 year ago with an interest rate of 5.2708%, through Tesco.

However we were quite shocked to receive our first annual statement which shows a balance of £29,792.40!

That will be the total amount payable in the loan agreement for the whole term minus monthly payments made so far.

This is due to the loan being front loaded with interest which I have just discovered by calling the call centre.

It isn't. It's due to the statement showing the total amount due if the loan runs its normal term. If you decide you want to repay it tomorrow they will rebate £thousands against that figure.

This was however never made clear in the credit agreement that we initially signed. Nor at any point when taking out the loan.

That is because it isn't front loaded.

I would never have intentionally signed up to a front loaded interest loan, as had planned to pay off the loan early, which is pointless with a front loaded loan.

And no lender will offer one as it's illegal.

I have called the call centre today, who apologised but said there is nothing they can do.

They could train their staff to explain things better.

I feel quite angry that I have taken out this loan under false pretences.
What can I do????

Calm down and stop using multiple question marks.

Ideally would like some sort of compensation or to have the loan switched to a regular loan paying off the interest and the loan at the same time, is this possible???

Nil. Do nothing.

By all means ring them and ask for a settlement figure, as this will put your mind at rest.

You've simply misunderstood how their loan statement works and their staff haven't had the brains to volunteer a settlement figure in the face of your over-excited questioning.

[Deleted User]

I'm starting to think that mse should be renamed compo corner . com

Clive_Woody

venison wrote: »

I'm starting to think that mse should be renamed compo corner . com

Sounds like a clear cut case of misselling

GarthThomas

So, you took out a loan, aren't clever enough to understand the numbers, but your first thought isn't to ask for help from someone numerate, but to scream for "compo"?

This makes me sad.