Loan Company trying to change Interest rates

Jimmym1988

Hi All. 

Hoping someone could give me some advice please, I’ve tried searching and cannot really find an answer. 

My partner recently applied for a loan and they sent documents through with an interest rate of 0.16 %. She signed these documents and returned (she only told me about the rate afterward ls) but now they’ve emailed her telling her the interest rate is incorrect and sent another one through.. 

What are the legalities of this please? Is she within her rights to keep the lower interest rate and refuse to pay the new and much higher one?

Any help and advice would be greatly appreciated

Ayr_Rage

What was the rate on the original application ?

0.16% is likely an obvious mistake and no funds will be released unless your partner agrees to the corrected rate.

Exodi

Have they sent her the money as I suspect they haven't?

There's no legalities to consider as the contract isn't in effect if she's not in receipt of the funds.

I'm not suprised she signed the documents and returned them, I expect she did it at warp-speed after picking herself up off the floor after noticing the 0.16% interest rate.

Jimmym1988 said:

Is she within her rights to keep the lower interest rate and refuse to pay the new and much higher one?

If she hasn't received the funds (as I suspect) then she won't even have the option to refuse to pay the higher rate. What was it advertised at out of interest?

0.16% is pretty obviously a mistake, I think even the cheapest loans are starting over thirty times higher at 5%+ ...

Jimmym1988

Thank you for the replies. 

I can confirm that they did indeed send the funds over once she signed the documents at 0.16%

Jimmym1988

Exodi said:

Have they sent her the money as I suspect they haven't?

There's no legalities to consider as the contract isn't in effect if she's not in receipt of the funds.

I'm not suprised she signed the documents and returned them, I expect she did it at warp-speed after picking herself up off the floor after noticing the 0.16% interest rate.

Jimmym1988 said:

Is she within her rights to keep the lower interest rate and refuse to pay the new and much higher one?

If she hasn't received the funds (as I suspect) then she won't even have the option to refuse to pay the higher rate. What was it advertised at out of interest?

0.16% is pretty obviously a mistake, I think even the cheapest loans are starting over thirty times higher at 5%+ ...

Thanks Exodi. 

Shockingly they did send funds over yes which is why I’ve asked the question, she doesn’t know where she stands. 

Exodi

Jimmym1988 said:

Exodi said:

Have they sent her the money as I suspect they haven't?

There's no legalities to consider as the contract isn't in effect if she's not in receipt of the funds.

I'm not suprised she signed the documents and returned them, I expect she did it at warp-speed after picking herself up off the floor after noticing the 0.16% interest rate.

Jimmym1988 said:

Is she within her rights to keep the lower interest rate and refuse to pay the new and much higher one?

If she hasn't received the funds (as I suspect) then she won't even have the option to refuse to pay the higher rate. What was it advertised at out of interest?

0.16% is pretty obviously a mistake, I think even the cheapest loans are starting over thirty times higher at 5%+ ...

Thanks Exodi. 

Shockingly they did send funds over yes which is why I’ve asked the question, she doesn’t know where she stands. 

To be honest, that's absolutely nuts. Whack the whole thing in a 6% bond or something and wait for the free money to roll in.

I think this is probably falling into moral territory.

I guess if she wanted, she could stick to her guns and wave the contract at them. A lot of people on MSE hate banks/lenders, so they'd probably support this decision.

Ayr_Rage

Was the rate that she applied for the same as the one they advised on the amended contract ?

horsewithnoname

Ayr_Rage said:e

Was the rate that she applied for the same as the one they advised on the amended contract ?

Only 51% of people get the advertised rate, so what’s that got to do with it?

MrFrugalFever

From experience (not personally being in this situation but dealing with a similar situation through work), your partner will NOT be able to dispute the error interest rate and even if she did, it won't get upheld.

The bank/lender are within their rights to adjust the rate if an error has been made, just as much as your partner is within her rights to withdraw entirely from the agreement within 14 days.

Because the 0.16%APR / AER quoted is quite clearly an obvious error on the lenders part I would highly suspect even a senior ombudsman would concur that it is 'reasonable' for her to have known this was an error and as such an appropriate risk based rate would be applied with the debtor given the opportunity to withdraw within 14 days should they not wish to accept such APR/AER.