HSBC early repayment issues.

Noooooobs

Hello,

I recently took out a loan with HSBC my bank. I borrowed £5000 at a rate of 5.1%. I have since made 3 payments of £106. I called them today to request a settlement fiqure and the amount is still more than i borrowed. I have made payments of over £300 but i have to pay them £5017 to settle early. Im waiting for a call back from a manager as they were un willing to tell me the break down of the fees. Is this correct? How is it right that i am paying over £300 to settle early?

Many Thanks.

[Deleted User]

Very little has been paid off the debt, as you have only made three payments.

With the addition of two months interest early repayment, it's taking you above the initial amount.

Find out the current balance and make a payment of slightly less than that, and then let your DD take the remained (any excess will be refunded).

TrickyDicky101

If you've quoted the rate correctly and there have been no missed payments/penalties applied other than the c.2 month's (additional) interest due the lender then I agree with you - the amount quoted is way too much. Ask HSBC for an explanation. At the same time I would ask them to provide you with their complaints procedure - it will concentrate their minds on getting an answer back to you if nothing else.

StopIt

That is correct.


At the start of a loan, even at modest APR, you're paying more interest than capital in your initial payments. Over time, the interest proportion is reduced and your capital payments increase.


The settlement payment will have approx. 2 months of interest included also, hence the total being £5335

BoGoF

Did you take a repayment holiday at the start of the loan. I believe HSBC offer a 3 month holiday at the start of the loan but interest would still accrue

TrickyDicky101

BoGoF wrote: »

Did you take a repayment holiday at the start of the loan. I believe HSBC offer a 3 month holiday at the start of the loan but interest would still accrue

Even if that is the case, if the 5.1% has been correctly quoted as the annualised rate (whether nominal or an APR (effective annual)) the balance repayable after 3 repayments totaling £318 - and taking into account 2 months' penalty interest due - should be below the original amount borrowed in my opinion (or rather, my calculation).

If the repayment holiday was 12 months before repayments started being made, then I get within a few pounds of the quoted repayment.

Noooooobs

Thanks for your replies,

Yes i believe we did have a 3 month repayment holiday. The reason i questioned it was because i asked for a breakdown of how they came to that fiqure. The initial operator told me that infomation was not availible, i then asked for a supervisor who then said to same thing although very rudely and abrupt. I then asked to be put through to a manager and was told i would receive a call with 20-30 mins. Of course that phone call did not materialise. If i could see a breakdown of their charges and interest then i would be happy to pay it as i really want to pay it off asap.

Many thanks

TrickyDicky101

My back-of-a-fag-packet calculation gets your early settlement amount (given 3 months payment holiday and 2 months penalty interest) to approx £4,850. The early settlement interest is £41.

I did have it wrong before - it was closer to 11 months' payment holiday going by their stated settlement amount.

PeacefulWaters

Yes i believe we did have a 3 month repayment holiday

Well you've immediately rolled up three months of interest charges there. Estimate around £70.

Add a fag packet £50 on for early settlement.

Deduct £300 or so already paid.

I'd suggest somewhere slightly north of £4,800 should be the settlement figure.