Ridiculous Loan Charges

Kenpachi

Dear MSE Forums;

Looking for some advice please.

I recently took out a Loan with Natwest for a sum of £13,500 at 15.9% Apr (best APR, that I could personally receive). This was on 16th of July 2018.

On 16th of August 2018, I was offered by my Halifax Bank a £15,000 loan at 6.9% Apr.

Cutting my total interest down by over £2,000, less payments per month for the same amount of months which mean I can overpay and reduce the loan quicker.

I have called Natwest for an early settlement fee and they are charging me 2 months of interest, to a total of £13,980.53. A payment of £480.53 pence for borrowing the money for a month. Whilst I understand that I did not cancel the loan within 14 days, is there any way I can dispute this ridiculous amount?

Thank you in advance
Kenpachi

Labsuper

What did you agree to?

C.M.

Check if you are able to make overpayments without penalty. If you are then make an over payment equal to the current loan balance minus the value of 3 or 4 months payments.

This will trigger an interest rebate, and reduce either the duration or monthly payments (a lot of loans allow you to choose which). Then continue payments for the remaining - very short - term, or then ask for an early settlement figure in 1 months time; this means your penalty of 2 months interest will be a much smaller amount

antrobus

Kenpachi wrote: »

....

On 16th of August 2018, I was offered by my Halifax Bank a £15,000 loan at 6.9% Apr.

I'd wait until that offer results in £15,000 sitting in your account first.

Craig1981

interest would be calculated form day 1 of the loan, plus two months interest for early settlement. standard practice. you can appeal, but doubt you'd be successful.

a settlement amount given should be valid for 30 days

Brookside88

Has the Natwest loan appeared on your credit file yet? If not, you need to get your skates on if you're going to apply for the Halifax one as the offer may not still stand when there's an additional 13.5k loan there

Herzlos

Standard charges for early settlement is 2 months interest. I think you'd have the right to withdraw within 14 days but I don't think that would be called a settlement.

macman

The 'ridiculous' loan charges are the ones you were quite happy to agree to in July when you contracted. Even after 2 months interest penalty you will still be saving £1,520 on the amount you were willing to pay a month ago. There are no grounds for disputing whatever charges you contracted to.
Bear in mind that NatWest have incurred all the upfront costs of the loan already, before you made any repayments.
PS: what rate were you offered by Halifax in July, as I'm presuming you asked your own bank for a quote before you signed with Natwest?

davidwood681

Just out of interest OP, what is your job and do you do it for free?

Penelopa.Pitstop

C.M. wrote: »

Check if you are able to make overpayments without penalty. If you are then make an over payment equal to the current loan balance minus the value of 3 or 4 months payments.

This will trigger an interest rebate, and reduce either the duration or monthly payments (a lot of loans allow you to choose which). Then continue payments for the remaining - very short - term, or then ask for an early settlement figure in 1 months time; this means your penalty of 2 months interest will be a much smaller amount

Follow this advice, it's a method to avoid the charge.

Nearlyold

Penelopa.Pitstop wrote: »

Follow this advice, it's a method to avoid the charge.

It only works if the lender doesn't charge up to 2 months interest on partial repayments, the lender can charge this if they want to. Only way to be sure is check the agreement or ask the lender.