Secured Loan Settlement Advice

AThornley

Good Afternoon,


Just wondering if there is anyone out there that could give me some advice please?

We took out a secured loan about 10 years ago for 12k out of desperation due to all over options explored unavailable at the time, We hoped this would be short term and eventually change to an unsecured loan. Unfortunately our circumstances became worse and roughly 6 years ago we entered an IVA. I am now in a position to pay the loan off having finished the IVA and have asked the loan company for a settlement figure, to my horror i would have to pay just shy of 12k back having already paid over 27k over the period of the loan so 39k to finish the loan off from a borrowed 12k. Now i may sound naive about this which i understand but we were in a desperate situation at the time and also young so we just pressed on with the loan and was guided by people saying we could pay it back within a couple of years. Getting to my point now is that i have approached the loan company and asked if they can reduce the settlement as i had paid so much money back but they will not budge. has anyone been in this situation before? Is there a way of me getting this reduced? I feel sick with it to be honest and have learnt very much the hard way. Any advice appreciated Thanks Adrian

Caz3121

What was the duration and monthly payment? (You can then Multiply one by the other to see what you were due to pay in total and see how much interest you will save by paying it early)

Gaz83

You need to specify what the interest rate was, what your monthly payment was, what the term was, and if you've missed any payments.

It's a secured loan so they're unlikely to accept anything less than full settlement - after all they can go after your assets (presumably your house) if you don't pay it.

foxy-stoat

Not really no, as this is secured the lender doesn't need to take any offers or offer a reduction because they will, at some point, get their contracted money back when property is sold assuming there is enough equity.

Your only hope to reduce the amount you will end up paying back is to refinance with a lower interest rate.

What was the original terms of the loan, interest and length of the loan?

AThornley

Thanks for your response, the term was 20 years and 106 months left to pay and paying roughly £203 per month.
No payments missed

foxy-stoat

I wouldn't think about how much you have already paid in relation to the settlement figure as the interest rate is around 20% (which you agreed to). So every £203 you have paid for the first few years you were only paying a few pounds off the capital.

You should think about how you are going to reduce the interest - seeing as you have already got yourself into trouble with unsecured borrowing and the previous IVA I wouldn't advise taking out money transfer and balance transfer credit cards and reducing the interest that way.

Maybe if you want a clean break - what is your house worth and current mortgage balance - maybe selling up and starting again would be a good option....or keep paying £203 a month for the next 8/9 years.

AThornley

I can pay the loan off now as i have been left some money, i wss just hoping some how i can reduce the settlement as i have paid so much back, frustrating that i basically have to pay back the full amount i took out over 10 years ago.

DCFC79

We don't know the history but for.example you could have defaulted.
Turning unsecured debt into secured is just a bad idea.

djphig

Unfortunately, that is your only option in terms of repaying basically.

When the secured loans market was unregulated by the FCA (when you took your loan out originally) interest rates were very high compared to what they are now. In the first few years you never pay back much capital, the same as with a normal mortgage, so it really doesn't surprise me that you have to pay back basically the full amount.

Gaz83

AThornley wrote: »

I can pay the loan off now as i have been left some money, i wss just hoping some how i can reduce the settlement as i have paid so much back, frustrating that i basically have to pay back the full amount i took out over 10 years ago.

Well, those were the terms and conditions you were presumably happy to agree to at the time.

You can ask them, there's nothing in it for them to accept a reduced figure though.

Caz3121

AThornley wrote: »

Thanks for your response, the term was 20 years and 106 months left to pay and paying roughly £203 per month.
No payments missed

if it went to full term you would be paying back £48.7k total so saving c £10k interest by paying it off early
the 106 payments still to pay would be £21.5k so a settlement of £12k saves you the interest on the remaining balance