Nationwide Loan - 23.9% APR

ollirian

I applied for a £12,000 loan with Nationwide in 2012.
It was a ridiculously high 23.9% APR loan on a 7-year term.

I needed it for a debt consolidation loan and at the time still had a decent credit score.

I was advised by the person at the branch that signed me up that I could always reapply for a lower APR loan with a 9-12 month repayment history in good standing.

After 3 attempts to reduce the APR with a new loan with Nationwide, I gave up.


I now have 17 months to pay the outstanding balance.

I up to very recently had no problems making monthly payments.

Last November and December I could not make payments for the first time.

I tried to pay off the arrears with the usual monthly amounts in January and February but much to my surprise I was told that Nationwide was charging me an interest on the outstanding of £1.50 a day.

This has now doubled my monthly outstanding.
I called Nationwide to review and wave the additional interest charged, having paid off monthly outstandings with no issues for 67 months in a row.

They brick-walled me saying there was nothing they can do.
I have just raised a formal complaint about the ridiculously high-APR higher than the APR on all of credit cards I hold.

After the formal complaint, I want to escalate this issue to the Financial Ombudsman.

Does anyone have any similar experience?
This is really extortionate.

I agree that the decision to take out a 23.9% loan was mine.
BUT should a Building Society or High Street bank be allowed to issue loans at such a high APR - should there not be a cap.

How ethical is this rate?
The responsible thing Nationwide should have done was to have turned me down.

After 84 months, I will have paid Nationwide about £24,000 for a a £12,000 loan.

How ethical is this?

financegeek

Hi Ollirian

Nationwide wouldn't have provided any advice on the application, so you can't 'blame' them as such that you took out he loan. You were aware of the APR at the time of signing and were seemingly happy with it. it was also obviously affordable at the time as you've made payments for the last 6 years.

What does your agreement say about additional interest? or is the £1.50 a day your standard interest based on the capital outstanding and arrears?

I don't think you'll be successful claiming the APR is extortionate, as you agreed to it at the time. If you're struggling with payments have you advised Nationwide of this and asked them for assistance? or did you just call to say you didn't agree with the interest rate being charged?

Nationwide have a duty to work with you if you're struggling. if you're then not happy with their response you can make a formal complaint and if necessary go to the FOS.

What do you want from the complaint though? You're not going to get compensation / the loan written off, so you're probably better off working with the lender to try and find a way forward rather than battling with them for an result that won't end in your favour.

BoGoF

ollirian wrote: »

After 84 months, I will have paid Nationwide about £24,000 for a a £12,000 loan.

How ethical is this?

So has it taken you this long to realise this?

Did you read the loan agreement?

Nationwide have done nothing wrong here so dont go wasting FOS time. If you want to see an extortionate rate take a look at some of the loan adverts on daytime tv.

enthusiasticsaver

The ombardsman cannot do anything as Nationwide have done nothing wrong. 23.9% is a high rate but there are loans which charge higher.

You presumably signed an agreement for this and have been paying it for more than 5 years so you cannot claim you did not realise the rate you were paying.

Undoubtedly it is recorded somewhere in terms and conditions the £1.50 per day interest charge on missed payments.

Take this as a life lesson to sort out your finances and don't consolidate lending in the future. It always works out more expensive and does not help you learn to live within a budget.

In the meantime contact Nationwide and try to come to an affordable arrangement.

BoGoF

And it seems you have made the fatal mistake of wracking up further debt after consolidation if the rate is "higher than the APR on all of credit cards I hold". Is this the reason you could no longer afford it?

DCFC79

ollirian wrote: »

I applied for a £12,000 loan with Nationwide in 2012.
It was a ridiculously high 23.9% APR loan on a 7-year term.

I needed it for a debt consolidation loan and at the time still had a decent credit score.

I was advised by the person at the branch that signed me up that I could always reapply for a lower APR loan with a 9-12 month repayment history in good standing.

After 3 attempts to reduce the APR with a new loan with Nationwide, I gave up.


I now have 17 months to pay the outstanding balance.

I up to very recently had no problems making monthly payments.

Last November and December I could not make payments for the first time.

I tried to pay off the arrears with the usual monthly amounts in January and February but much to my surprise I was told that Nationwide was charging me an interest on the outstanding of £1.50 a day.

This has now doubled my monthly outstanding.
I called Nationwide to review and wave the additional interest charged, having paid off monthly outstandings with no issues for 67 months in a row.

They brick-walled me saying there was nothing they can do.
I have just raised a formal complaint about the ridiculously high-APR higher than the APR on all of credit cards I hold.

After the formal complaint, I want to escalate this issue to the Financial Ombudsman.

Does anyone have any similar experience?
This is really extortionate.

I agree that the decision to take out a 23.9% loan was mine.
BUT should a Building Society or High Street bank be allowed to issue loans at such a high APR - should there not be a cap.

How ethical is this rate?
The responsible thing Nationwide should have done was to have turned me down.

After 84 months, I will have paid Nationwide about £24,000 for a a £12,000 loan.

How ethical is this?

Nothing wrong with the rate offered which you accepted.

You had a choice to decline the offer and reduce your outgoings or take on a second job.

The rate isnt the best, it isn't extortionate though, maybe the high rate is a result of the option you chose for loan.

ollirian

Thank you for all your responses.
As I alluded to in my initial message - I take responsibility for taking out the loan.
With that being said, I am still firm on the following points.

High street banks and building societies should have a cap on loan APRs as a matter of ethics in order to stop unaffordable lending, I think a fair point is a maximum of 15% APR.

I reached out to Nationwide to waive off the interest accrued over 2 months in a bid to get my account in good standing. This was not too much of an ask given my history with them.

badmemory

ollirian wrote: »

I reached out to Nationwide to waive off the interest accrued over 2 months in a bid to get my account in good standing. This was not too much of an ask given my history with them.

They obviously did think it was too much to ask. I can't say I blame them. Why do you think they should change their T&Cs to suit what you want? They can't change their terms & conditions to say well badmememory I know we promised you X% return on your savings but as we are letting ollirian off paying all HE owes we are going to cut that by half.

System

ollirian wrote: »

Thank you for all your responses.
As I alluded to in my initial message - I take responsibility for taking out the loan.
With that being said, I am still firm on the following points.

High street banks and building societies should have a cap on loan APRs as a matter of ethics in order to stop unaffordable lending, I think a fair point is a maximum of 15% APR.

Debt consolidation loans are a risk, you've proven why. Because they're a higher risk of default they come with a higher APR.

If there was a cap put on High St bank APRs then quite simply what will happen is they'll stop lending to people like yourself who are a high risk. What position would you have been in over the last half decade had you not been able to get a consolidation loan with Nationwide at 23.9% APR, a Payday loan at 2390% APR? Would you have been bankrupt by now?

PeacefulWaters

ollirian wrote: »

High street banks and building societies should have a cap on loan APRs as a matter of ethics in order to stop unaffordable lending, I think a fair point is a maximum of 15% APR.

So you'd deny those with expensive but affordable credit cards, like Aqua or Marbles, the right to consolidate to a far cheaper rate?

Not very ethical of you.

iolanthe07

23.9% is high, but there are a lot higher rates out there. Nationwide assessed your risk profile and made an offer which you were free to decline or accept. The fact that you now regret accepting it is not their fault.