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Help! Family Dispute Over Loan

Sc0t88
Sc0t88 Posts: 8 Forumite
First Post
Hi I’m looking for a bit of advice.

My partner had bad credit and couldn’t secure finance to buy a car so his father kindly stepped in and took a loan out in his name for my boyfriend to get his car. My bf has a standing order set up to repay his dad monthly for the car.

However, my bf’s circumstances have now changed and he is now able to get credit on his own for cars etc. By carrying out an online check he has also discovered that if he sold the car he will be able to pay his dad back the outstanding loan amount and also make a tiny profit. 

The issue is when he contacted his dad to discuss the situation he has found out that his dad has increased the loan amount for his own personal use (home improvements) and he doesn’t want my boyfriend to pay a lump sum as he says it will increase his interest rate and monthly payments.

I feel like we are now trapped in this agreement. Has anyone been in a similar situation and can offer some advice? My bf and I both thought as a lump sum had been paid the interest that his dad would pay on the remaining balance would be less? 

TIA
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Comments

  • SaverRate
    SaverRate Posts: 955 Forumite
    Fifth Anniversary 500 Posts Name Dropper
    Aslong as the loan isnt linked to the car which it doesnt sound like it is, then as per zx81's post
    FTB - April 2020 
  • Sc0t88
    Sc0t88 Posts: 8 Forumite
    First Post
    Your boyfriend can pay the dad the full amount. The dad doesn't need to pay it off the loan if he'd prefer not to.
    This is what we thought and planned on doing but I wanted to double check I wasn’t missing anything. My thoughts are ‘pay him what you owe and he can do what he wants’. There are a few background issues and I don’t fully trust his dad so the sooner our financial ties are cut to him the better in my opinion. 
  • [Deleted User]
    [Deleted User] Posts: 3,297 Forumite
    1,000 Posts Fourth Anniversary Photogenic Name Dropper
    Sc0t88 said:
    Hi I’m looking for a bit of advice.

    My partner had bad credit and couldn’t secure finance to buy a car so his father kindly stepped in and took a loan out in his name for my boyfriend to get his car. My bf has a standing order set up to repay his dad monthly for the car.

    However, my bf’s circumstances have now changed and he is now able to get credit on his own for cars etc. By carrying out an online check he has also discovered that if he sold the car he will be able to pay his dad back the outstanding loan amount and also make a tiny profit. 

    The issue is when he contacted his dad to discuss the situation he has found out that his dad has increased the loan amount for his own personal use (home improvements) and he doesn’t want my boyfriend to pay a lump sum as he says it will increase his interest rate and monthly payments.

    I feel like we are now trapped in this agreement. Has anyone been in a similar situation and can offer some advice? My bf and I both thought as a lump sum had been paid the interest that his dad would pay on the remaining balance would be less? 

    TIA
    How will paying a lump sum off increase the father’s own interest and monthly repayments? That does not make any sense. 
  • elsien
    elsien Posts: 35,097 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 2 July 2021 pm31 1:53PM
    He gives dad the money. Not in cash, but by bank transfer, standing order etc. Highlighted on the payment as final loan repayment, for the sake of clarity. 
    Dad confirms in writing/email/in some trackable form that the money he lent his son is paid off in full, to save any future dispute.
    Dad is free to do whatever he wants with that money, whether to pay some of the loan down or blow it all on the chances of England winning the football. 

    All shall be well, and all shall be well, and all manner of things shall be well.

    Pedant alert - it's could have, not could of.
  • DrEskimo
    DrEskimo Posts: 2,384 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    Sc0t88 said:
    Hi I’m looking for a bit of advice.

    My partner had bad credit and couldn’t secure finance to buy a car so his father kindly stepped in and took a loan out in his name for my boyfriend to get his car. My bf has a standing order set up to repay his dad monthly for the car.

    However, my bf’s circumstances have now changed and he is now able to get credit on his own for cars etc. By carrying out an online check he has also discovered that if he sold the car he will be able to pay his dad back the outstanding loan amount and also make a tiny profit. 

    The issue is when he contacted his dad to discuss the situation he has found out that his dad has increased the loan amount for his own personal use (home improvements) and he doesn’t want my boyfriend to pay a lump sum as he says it will increase his interest rate and monthly payments.

    I feel like we are now trapped in this agreement. Has anyone been in a similar situation and can offer some advice? My bf and I both thought as a lump sum had been paid the interest that his dad would pay on the remaining balance would be less? 

    TIA
    How will paying a lump sum off increase the father’s own interest and monthly repayments? That does not make any sense. 
    Have a feeling the Dad will be joining soon to create a thread about some obscure unregulated secured loan on his home that he can't get rid of.....
  • Sc0t88 said:
    Your boyfriend can pay the dad the full amount. The dad doesn't need to pay it off the loan if he'd prefer not to.
    This is what we thought and planned on doing but I wanted to double check I wasn’t missing anything. My thoughts are ‘pay him what you owe and he can do what he wants’. There are a few background issues and I don’t fully trust his dad so the sooner our financial ties are cut to him the better in my opinion. 
    I agree with this, and what others have said; pay back what he owes, and it’s done and dusted.

    One question though, what do you mean when you say he’ll make a profit? He’ll have some money left over after paying off the loan?

    If so, that’s not profit, and if he’s going to have to borrow again to replace the car then what’s the point?

    Are you not also taking a risk that any new loan will be at a much higher rate than the current one?
  • Mojisola
    Mojisola Posts: 35,571 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Your boyfriend can pay the dad the full amount. The dad doesn't need to pay it off the loan if he'd prefer not to.
    But make sure it's documented and you keep the records safe in case, in the future, his Dad claims it wasn't repaid.

  • Sc0t88
    Sc0t88 Posts: 8 Forumite
    First Post
    His dad has now said he contacted the bank today regarding a lump sum part payment and they have rejected this and said he can’t refinance the loan so he is now going to take a trust deed out. There is definitely something going on that he’s not telling us about but we are still sticking to our guns and paying back what we owe and leaving him to do what he wants! As I said previously he is insulting our intelligence with these lies, what bank refuses to take back money they have loaned you! 
  • Soot2006
    Soot2006 Posts: 2,184 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Sc0t88 said:
    His dad has now said he contacted the bank today regarding a lump sum part payment and they have rejected this and said he can’t refinance the loan so he is now going to take a trust deed out. There is definitely something going on that he’s not telling us about but we are still sticking to our guns and paying back what we owe and leaving him to do what he wants! As I said previously he is insulting our intelligence with these lies, what bank refuses to take back money they have loaned you! 

    The dad's arrangement with the bank is irrelevant.
    You wouldn't be paying the bank, you would be paying the dad.
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