Miss sold pay day loan??

Hughes04

I took a £4000 payday loan out with Bamboo and after I paid it off I filed a complaint for miss selling and its been 6 weeks and they are still saying they are in the right but want another opinion.

I took £4000 over 5 years at 49.9% because I knew I would pay it off sooner than 5 years. I had the loan 72 days and in that time I made 2 payments of £176 (£352 in total. I then went to settle and was told I need to pay £4398. I did but afterward was when I realised. The sum was £4000, but that meant I paid £750 interest for 72 days!!!!

I complained and they then said "we decided to front end the interest, in the first 2 months it was only £16 capital being paid off. I highlighted 1, you didn't declare it was front end loaded interest and in the example on your website, it was evenly spread over 5 years!! I even highlighted their quote of "only pay interest for the time you have it actually false based on this IMO. They said" we don't have to tell you what interest we decide to charge on a particular month and done nothing wrong.

Complaint been 6 weeks now and when I ask for update they just say looking at it.

Has this been miss sold in your eyes?

Ben8282

The loan has not been miss-sold. However, I believe front loading interest is illegal.

Declan1992

I don’t think it is illegal

Loans2go do the same thing

boo_star

The interest isn't front-loaded.

Interest has been calculated daily and the earlier in the loan term you are, the more of your repayments go towards interest (almost all of it in this case.) As the outstanding amount drops, the amount of interest you accrue each month drops and the amount of capital paid off with each repayment increases.

As the company is also allowed to charge an additional one month of interest when you settle the loan early, that's where the figure they give, which is higher than the initial loan amount, comes from. Although by my calculations it is a little higher than expected, but not much.

If the interest was front loaded they'd be asking for nearly £11k from you.

Caz3121

Hughes04 wrote: »

I knew I would pay it off sooner than 5 years. I had the loan 72 days and in that time I made 2 payments

"If you are looking to, or planning on settling the loan very early within its term, such as within the first few months, this may not be a suitable product for you and you may wish to choose an alternative product with another company."
https://www.bambooloans.com/faq/how-do-i-get-my-settlement-figure/

[Deleted User]

As above, the interest wasn't front loaded, despite what the agent may have said. You wouldn't have paid off any capital at all on a front loaded loan.

Also worth pointing out that a 5 year loan is not a payday loan, unless you only get paid twice a decade.

bris

The title is a bit misleading, a £4000 loan over 5 years is not a pay day loan.

mcpitman

Hughes04 wrote: »

Has this been miss sold in your eyes?

Nope - This hasn't been mis-sold, but you have misunderstood what the product offered was.

It isn't a payday loan, when it is over 5 years.

Paying it off early - this wasn't the product for you, particularly when the lender tells you that if you want to pay it off early, the product isn't from you.

Buyers remorse and misunderstanding. Next time take a few more seconds and read what the product offering is before signing up to it.

Clive_Woody

If they had front loaded all of the interest then you would have to repay £9,487.80

glennstar

Hughes04 wrote: »

we don't have to tell you what interest we decide to charge on a particular month and done nothing wrong

If the support agent actually said this then it's fairly poor form... if they did indeed say this. The reason I doubt it somewhat is that I suspect they were saying the interest is set our clearly in the terms you agreed to and they don't need to produce a running commentary.

I remain interested in the fact that you have clearly framed your statement with an agenda. Bamboo do not offer payday loans, their product is £1k - £6k between 1 and 5 years.

As Jsacker sensibly suggests, if you have a valid case, take it to the FoS, badmouthing bamboo on this forum is of limited value.

SnowTiger

Hughes04 wrote: »

I complained and they then said "we decided to front end the interest, in the first 2 months it was only £16 capital being paid off.

glennstar wrote: »

If the support agent actually said this then it's fairly poor form...

Here says lenders can calculate the full cost of the loan, including interest, then rebate the interest for months after the loan is repaid.

Elsewhere I've read settlement figures are valid for 28 days and lenders usually then charge an extra month's interest.

My guess is that interest for 72 days + 28 days + 30 days (130 days) is probably about £750.

Lender should explain how it came up with the figure it did.