AA Loans Partial Repayment Insanity

Framer_Shane

I have an AA loan, and I spoke to someone today about making a fairly hefty partial repayment on the outstanding balance.

My reasons are that I'm in the process of separating from my wife, and so I need to move out. By paying off what I can, It brings my monthly repayment right down (to £22 per month keeping the term length the same) which frees up money to pay for the rent on a new place.

However, I've just been told that the repayment I plan on making will not be applied to my account straight away. Instead it will take 54 days, and in the meantime I will continue to pay my current repayment amount (almost £300) until 24th March.

This obviously doesn't help me as I need to be out by the end of this month.

I've had a bit of a moan, and I asked the call operator to lodge a complaint regarding this, but they've said that because it's their process, it won't change a thing.

They said it's in their terms and conditions. Not the main terms and conditions I got when taking out the loan mind you. No, I get these new terms and conditions when I receive the letter about my partial repayment and the quote for the new monthly repayments in 5-7 days time.

I'm livid, and also now a bit worried about what I'm going to do now.

Anyone else had a similar experience to this with AA our any other provider? Did you manage to improve the issue?

Any help or input would be great.

SuperAllyB

I have absolutely no idea about the AA Loans T&C's but can't you keep hold of the money and use it to pay rent rather than overpaying the loan?

Framer_Shane

Can’t do it.

To fork out the initial cost (fees, deposit, first month rent) plus paying out for utilities etc and keep paying the loan...would cripple me.

The sum I plan to pay off would only last a few months.

It’s a much cheaper option to clear the loan and free up my income.

Gaz83

This seems very bizarre.

What do your own Ts and Cs say about early repayment?

Framer_Shane

This Terms and Conditions thing was my argument.

There T&C's that came with the loan agreement state...

4. EARLY REPAYMENT
4.1 You can repay all or part of the credit borrowed under this Agreement at any time. If you wish to make an early full or partial repayment, you must:
(a) give us notice orally or in writing. Our contact details can be found at the ‘’Early repayment’’ section of your Agreement; and
(b) make the repayment before the end of the period of 28 days beginning with the day after we receive notice from you, or on or before any later date specified in the notice.
4.2 Where you take the steps listed in clause 4.1 above, the amount you owe us will be reduced by an amount equal to the sum of the amount paid and any statutory rebate, where applicable.
4.3 On or after making an early partial repayment, you can ask us to give you a statement showing the effect of your early repayment on your loan account, which we will provide before the end of the period of seven working days from the day we receive your request.
4.4 Please note that if you make an early partial settlement, your remaining balance can then be repaid within a shorter credit period or your remaining instalments can be reduced and the original credit period can remain unaltered. If you make a partial early repayment we will reduce the term of your Agreement unless you request otherwise.
4.5 Please note that early payments to your account will be allocated to the oldest outstanding debt first.

When I called them out on this, they then said that the terms and conditions for partial repayment will be included with the quote they send through the post detailing the partial payment amount, and what my new monthly repayment will be which I will receive in 5 days or so.

This is when I asked to lodge a complaint because, to give me the terms and conditions at that point or even verbally at the time of speaking them, I think, Is shocking.

D_M_E

Do the T&C which you have for the loan when you originally took it out say anything about changing T&C - such as "we may change these T&C at any time by giving notice" or something similar?

If not then they have to stick to the original T&C which you signed up to, and should accept your lump sum and immediately apply it to your loan and recalculate your payment going forward.

Use the payment details - direct debit? - to send a payment, the DD will have an account and sort code and loan reference number and make sure you copy these exactly when you send the payment.

If they refuse to do as the T&C state by sitting on the sum for as much as a week, never mind 6 months then a written - not telephoned - complaint about their behaviour, pointing out your clause above, must be made, then escalate to the FCA if/when they don't do as you ask 8 weeks later.

Framer_Shane

The full terms and conditions that came with my loan are also on their website ( I can't post a link because I'm a new member) but you can google 'AA Loans terms and Conditions'

No mention of them being able to change them as far as I can see.

Thats not a bad shout about the direct debit thing.

Gaz83

It's possible whoever you spoke to on the phone made a mistake.

People make mistakes. Phone back and double-check.

Craig1981

you would be charged upto 56 days interest on the amount you are overpaying - could be confusion with this

Framer_Shane

I’m going to wait for the letter with my quote based on my repayment amount to come through and I’ll go from there.

I did call back after my first conversation to clarify I wasn’t misunderstanding and I was again told that it would be 54 days for the payment to be applied.

System

Framer_Shane wrote: »

Can’t do it.

To fork out the initial cost (fees, deposit, first month rent) plus paying out for utilities etc and keep paying the loan...would cripple me.

The sum I plan to pay off would only last a few months.

It’s a much cheaper option to clear the loan and free up my income.

Sorry but that makes absolutely no sense whatsoever that to not pay off a lump sum and live on it instead would mean you were worse off. Other than a bit of additional interest it leaves you in exactly the same financial position in a few months.

You're still going to have those upfront costs to pay but you'll not have the money to do it because you've paid off a chunk of the loan.

Over the three month period you're still going to be paying out the same total amount of money, it'll just be going in different directions depending on whether you pay off the loan with it or live on it.