Natwest early settlement fee confusion

anamenottomention

I have now changed the title, as suggested. Thank you for everyone chipping in and pleased to hear that the CAB advice is in fact somewhat ambiguous and can be partly to blame for my lack of understanding


As to the suggestion that Natwest are "good enough" to loan me some money, I think you need to grow up and see that there is no goodwill when banks lend money, it is simply a business decision based on risk. From my experience (time and time again, I must add) these business decisions are always skewed to benefit the bank, not the customer. But, then again, that is a whole other discussion.



For now, thank you all again.

[Deleted User]

ThePants999 wrote: »

I'm not sure what "front loaded interest" means to you. It's an ambiguous term. But it certainly exists, depending on your interpretation.

It certainly exists - or more accurately, used to exist.

It means a loan where the interest is 'front-loaded' and therefore must be paid off in full before the capital is repaid.

It was outlawed several years ago and no loans are now front loaded.

ThePants999

Deleted_User wrote: »

It certainly exists - or more accurately, used to exist.

It means a loan where the interest is 'front-loaded' and therefore must be paid off in full before the capital is repaid.

It was outlawed several years ago and no loans are now front loaded.

There certainly are still loans where all the interest is added on up front. When you say it was "outlawed several years ago", I think you're talking about the very legislation that's at the heart of this thread, that requires loan providers to provide a rebate of some of this interest if the loan is repaid early. What's been outlawed is front loading without rebate.

anamenottomention

Hello again. I also had a loan with Sainsburys. I requested a settlement firgure with them too. This is what they replied with:


Balance Outstanding: £3569.04
Rebate of Charges*: £187.05
Settlement figure: £3381.99

* The above rebate of charges has been calculated having regard to the Consumer Credit (Early Settlement) Regulations 2004.

I'm confused now. The setup of this loan works the same as my Natwest one that I originally wrote about, that is: each month a DD is taken, but each month interest is added to the loan also. So it is not a case of the loan being preloaded (ie. borrowing 5K, adding interest of £1k at the start of the loan and then paying £6k off in a set amount of time - ie. £100/month over 5 years).

anamenottomention

Any thoughts?

Dobbibill

Sainsburys website says what the previous posts have said so I'm not sure why they've positioned it in that manner on your paperwork.



https://www.sainsburysbank.co.uk/loans/early-repayments

What will be included in the early settlement quote?

This will tell you:

• the amount you still owe on your loan
• any early repayment charges (if any)
• the early settlement figure due
• the date you should pay the settlement figure by - the 'settlement date'

The quote will be valid for 28 days. This gives you time to consider the figures and decide whether you want to go ahead with the early repayment. You will continue to pay interest on the outstanding loan balance during this time.
Are there any early repayment charges?

The Consumer Credit (Early Settlement) Regulations 2004 allow lenders to charge up to 58 days interest in the event that a customer decides to repay their loan in full early.
If you're nearing the end of the loan term check that it is worth making the early repayment, considering the interest you'll pay.

anamenottomention

Not sure if you get the point: with Natwest they added the early repayment charges but did not take into account the Consumer Credit (Early Settlement) Regulations 2004.. With Sainsburys, they deducted charges I was due under the Consumer Credit (Early Settlement) Regulations 2004 and furthermore do not appear to apply any early settlement charges.


In other words (with no reference to the actual figures, purely as an example to illustrate what has happened here): with Natwest if I was to owe 10K, they add £300 for an early settlement (£10300). With Sainsburys, they deduct the £300 (£9700).



Surely, if both were to abide by the same regulations one of them is wrong, and I doubt it is Sainsburys?

antrobus

anamenottomention wrote: »

....

Surely, if both were to abide by the same regulations one of them is wrong, and I doubt it is Sainsburys?

Then I suggest you make a complaint to NatWest.

anamenottomention

Sure, I am considering this, however, I wanted to see what others thought. I clearly was too hasty in my original post, so don't want to start complaining about something if I missed something obvious?