Loan overpayment help

sardonicraccoon

Hi there, inexperienced borrow here, looking for some help or advice (and please not criticism). 

In a bit of a bind, I took out a loan with Loans2go at an eye wateringly high level of interest. The loan sum was £1500 over 24 months, with a repayment amount of £4848. 

It was (and still is) my intention to pay this loan off much quicker by making overpayments. 

I made my first repayment of £202 on 31/01 and this weekend made an overpayment of £400. On Tuesday I was contacted to see why I had made this overpayment, to which I advised of my intentions above. I was today informed: 

“ Please note that as the interest is frontloaded, overpayments will not reduce your interest. Frontloaded interest is sometimes an area that is misunderstood. This simply means that all of the interest is added at the beginning of the loan term and split into equal monthly or weekly contractually expected payments. This ensures that what you see at the start of the loan is what will still be expected as the loan progresses, without having to worry about additional interest being added.

 However, we have other mechanisms to allow you to bring your loan to a close early such as an early settlement figure.”

Now I know using this company was such a high interest rate was a silly thing to do in the first place, so please no admonishing me for that as I have given myself enough grief for it, however, is it correct that even if I overpaid a couple of hundred every month, (where possible), despite the term of the agreement being reduced, I would still owe £4848?

In this case it strikes me as futile to make any overpayments, and I’d be better served by saving as much as possible as quickly as possible and requesting an early settlement when I feel I have reached the required amount?

I have asked for the £400 to be returned on this basis but I’m not sure this will be honoured so now feel I’ve thrown a chunk of money down the drain. They have given me an early settlement figure today of £1312.58. 

If it helps, the loan started on 07/01/25, and to date I have made 1 payment of £202 and what I thought was an overpayment of £400. 

Any guidance, clarification or suggestions on how to proceed would be greatly appreciated. 

Thank you 

retiredbanker1

It might be useful if you could put a copy here of your loan agreement (with your personal details redacted).
Loan companies are not allowed to frontload interest anymore - so (if allowed) any overpayments SHOULD reduce the overall interest charged.
I am thinking perhaps even the loan company staff do not understand the legality of their own loan agreements?

The £400 you have overpaid will not be lost - either they return it as you asked or it will be applied to the loan.

Is there anyway you can get regular credit facilities?
Even a bank overdraft at 40% or so would be cheaper than these loan sharks.

sardonicraccoon

PRE-CONTRACT CREDIT INFORMATION (Standard European Consumer Credit Information)

1. CONTACT DETAILS

Creditor

Address

Web address

Loans 2 Go Limited

Bridge Studios, 34a Deodar Road, London SW15 2NN

www.loans2go.co.uk

2. KEY FEATURES OF THE CREDIT PRODUCT

Type of credit. Fixed Sum Loan Agreement regulated by the Consumer Credit Act 1974

The total amount of credit. This means the amount of credit to be

provided under the proposed credit agreement or the credit limit.

£1,500.00

How and when credit would be provided. When we have signed the Credit Agreement we will pay the loan amount into the bank account

details you have provided to us at the time you made your application.

The duration of the credit agreement. 24 months

Repayments. 23 repayments of £202.00 and a final payment of £202.00. Your 1st repayment of £202.00 is due

on 07/02/2025 and subsequent payments of £202.00 will be due on the same day of each

succeeding month.

The total amount you will have to pay. This means the amount you have

borrowed plus interest and other costs.

£4,848.00

3. COSTS OF THE CREDIT

The rates of interest which apply to the credit agreement. Interest is charged at a simple fixed interest rate of 111.60% per annum on the amount of credit

for the term and is applied to the account, in full at the commencement of the agreement.

Annual Percentage Rate of Charge (APR). This is the total cost

expressed as an annual percentage of the total amount of credit.

The APR is there to help you compare different offers.

APR 320.0% (fixed)

Related Costs

Costs in case of late payments Interest may be charged at the contractual rate on late payments.

Charge for using a specific payment method. We are entitled to pass on any transaction cost we reasonably incur in processing a payment.

Any other costs deriving from the credit agreement.

Conditions under which the above charges can be changed.

You will pay our charges and expenses for tracing you and enforcing our rights, including taking

court action. Our costs for in house legal work will be charged at a minimum fee of £100 plus

fixed costs as set out in the Civil Procedure Rules or rates in accordance with the Civil Litigation

Guideline Rates as may be published from time to time, to be determined by the court for any

work we are reasonably required to do. If we instruct third party legal representation then the

costs you will be liable for will be the costs we reasonably incur.

We may change these charges by giving you reasonable notice to take account of changes in

costs that we reasonably incur.

Consequences of missing payments. Missing payments could have severe consequences and make obtaining credit more difficult.

Where payments are missed we may take action to recover monies owed including but not limited

to: Recording default information about you with credit reference agencies; taking court action

against you, and if we obtain judgment, applying to the court for an Attachment of Earnings,

Property Charging Order or Warrant of Execution (or similar in Scotland and Northern Ireland).

4. OTHER IMPORTANT LEGAL ASPECTS

Right of withdrawal. You have the right to withdraw from the credit agreement before the end of 14 days beginning

with the day after the day on which you receive a copy of the executed agreement. You can

withdraw from the agreement by calling us on 0330 400 4380 or writing to Loans 2 Go at Loans 2

Go Limited, Bridge Studios, 34A Deodar Road, London SW15 2NN.

If you withdraw from the agreement, you will then have to repay the amount you have borrowed

(with interest up to the date of repayment) without delay and, in any event, within 30 days of the

date on which you have notified us. If you do not repay all amounts when they are due, the

agreement will continue.

Early repayment. At any time before final Repayment is due, you have the right to pay off some or all that you owe

us.

Consultation with a Credit Reference Agency. Should Loans 2 Go decide not to proceed with this agreement on the basis of information

received from a credit reference agency we must inform you of the decision, tell you that it has

been reached on this basis, and give you details of the credit reference agency.

Right to a draft credit agreement. You have the right, upon request, to obtain a copy of the draft credit agreement free of charge,

unless we are unwilling at the time of the request to proceed to the conclusion of the credit

agreement.

5. Additional information in the case of distance

marketing of financial services

(a) concerning the creditor

Registration number The supervisory authority Loans 2 Go Limited Registered in the UK, number 4519020. Financial Conduct Authority

permission number 679836. Registered with the Information Commissioner’s Office Z720743X.

The supervisory authority is the Financial Conduct Authority.

(b) concerning the credit agreement

The law taken by the creditor as a basis for the establishment of relations

with you before the conclusion of the credit agreement

The law applicable to the credit agreement and/or the competent court Language to be used in connection with the credit agreement The establishment of relations with you before the conclusion of the credit agreement is governed

by English Law unless you live in another part of the UK, in which case the relations are governed

by the law in that part of the UK.

English Law governs the agreement unless you live in another part of the UK, in which case the

agreement is governed by the law in that part of the UK.

The language used in this agreement and any communication relating to it will be in English.

(c) concerning redress

Access to an out-of-court complaint and redress mechanism

If you have a complaint, please let us know. You can log a complaint over the telephone or if you

want to do it by post write to Loans 2 Go Customer Satisfaction, Bridge Studios, 34A Deodar

Road, London SW15 2NN.

If you’ve told us about your complaint and you’re not happy with our final response you may be

able to refer it to the Financial Ombudsman Service, Exchange Tower, London, E14 9SR.

Fixed Sum Loan Agreement Regulated by the Consumer Credit Act 1974

Lender: Loans 2 Go Limited. Borrower:

Signed: Agreement Number:

Date: 07/01/2025 Signed Date: 07/01/2025Agreement No: 102009546

Fixed Sum Credit Agreement regulated by the Consumer Credit Act 1974

Between “We” and “Us” (the Lender), Loans 2 Go Limited,

and you

(The Borrower Name):

Address:

KEY FINANCIAL INFORMATION

Amount of Credit: £1,500.00 Total Amount Payable: £4,848.00 Duration of the Agreement: 24 months APR: 320.0%

As required the APR has been calculated on the assumption that the agreement remains valid for the full term and that we and you have fulfilled all our obligations to each

other under the agreement by the dates specified in the agreement.

Each repayment is due and payable on the same day of each succeeding month, commencing 07/02/2025

Arrangement Fee: £0 Interest: £3,348.00 Total Charge for Credit: £3,348.00

Right of Withdrawal Daily Interest:£4.59

When we have signed the Credit Agreement we will pay the loan amount into the bank account details you have provided to us at the time you made your application.

Interest is charged at a simple fixed interest rate of 111.60% per annum on the Amount of Credit for the Duration of the Agreement and is applied to the account, in full, at

the commencement of this agreement. The rate applies for the duration of this agreement.

OTHER INFORMATION

Charges and Interest for Late Payments We have a right to charge interest on all overdue sums at the APR shown above (see clause 3 overleaf).

The following other charges will apply: We are entitled to pass on any transaction cost we reasonably incur in processing a payment. You will pay our

charges and expenses for tracing you and enforcing our rights, including taking court action (see clause 5 overleaf). Our costs for in house legal work will

be charged at a minimum fee of £100 plus fixed costs as set out in the Civil Procedure Rules or rates in accordance with the Civil Litigation Guideline

Rates as may be published from time to time, to be determined by the court for any work we are reasonably required to do. If we instruct third party legal

representation then the costs you will be liable for will be the costs we reasonably incur.

Statement of Account You have the right to receive, on request, and free of charge, at any time throughout the duration of the agreement pursuant to

section 77B of the Consumer Credit Act 1974, a statement in the form of a table showing: a) the details of each instalment owing under the agreement; b)

the date on which each instalment is due, the amount and any conditions relating to the payment of the instalment; and c) a breakdown of each instalment

showing how much comprises i) capital repayment, ii) interest payment, and iii) if applicable, any other charges.

Consequences of missing payments: Missing payments could have severe consequences and make obtaining credit more difficult. Where payments

are missed we may take action to recover monies owed including but not limited to: Recording default information about you with credit reference

agencies; taking court action against you, and if we obtain judgment, applying to the court for an Attachment of Earnings, Property Charging Order or

Warrant of Execution (or similar in Scotland and Northern Ireland).

Ombudsman Scheme If you are a non-business debtor you have a right to complain to the Financial Ombudsman Service. A business debtor may have

a right to make such a complaint.

Supervisory Authority We are authorised and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN which is also the

supervisory authority under the Consumer Credit Act 1974.

Early Repayment Under s94 of the Consumer Credit Act 1974 you have the right to repay this agreement early in full or in part by contacting us on 0330

400 4380 or by writing to us at Loans 2 Go Limited Bridge Studios, 34A Deodar Road London SW15 2NN. Payment can be made by debit card or

cheque, payable to us, at the above address or by bank transfer to an account which you should contact us for details of. To repay all the credit early you

must pay all amounts due to us under this agreement less any rebate of charges allowable by law. To repay part of the credit early you must pay some

amount to us which is not yet due under the agreement within 28 days of your notice of intention to make early repayment. We shall reduce the amount

payable by you as prescribed by law and by reducing the amount of each repayment still to be repaid. We will not seek to recover compensation under

s95A of Consumer Credit Act 1974 should you make early repayment(s).

Right of Withdrawal You have a right to withdraw from this credit agreement under s66A of the Consumer Credit Act 1974 by giving us written or oral

notice, at our address, or by telephoning the number, stated above, within 14 days from the day after the date of this agreement. You must repay the

credit, and interest that has accrued from the date credit is provided to the date of repayment without delay and no later than 30 calendar days after giving

your notice of withdrawal. Payment should be made by debit card or cheque, payable to us, at the above address or by bank transfer to an account which

you should contact us for details of. If you withdraw from the agreement the amount of interest per day that will accrue onto the account will be as stated

above.

Read full agreement, including Terms of the Agreement overleaf, before signing

This is a Credit Agreement regulated by the Consumer Credit Act 1974.

Sign it only if you want to be legally bound by its terms.

Borrower Signature: Date: 07/01/2025 Signature of (or on behalf of) the Lender

Date: 07/01/2025

ELECTRONIC COMMUNICATIONS By placing a cross in the box you agree to receive correspondence and/or legal notices

electronically at the email address specified in the Borrower’s Details section, should we choose to adopt that method of communication X

USE OF YOUR INFORMATION Information about the Borrower and this agreement may be used by the Lender and by other companies

associated with the Lender for the marketing to the Borrower of credit and other products. If the Borrower does not wish to receive

information on such products the Borrower will please place a cross in the box opposite. X

In addition, we draw your attention to the terms overleaf regarding the “Use of Your Information” and "Use of Associated Records" which

you should read before you sign the agreement.

Borrower's DetailsTerms of Agreement

1. Payment

You agree to repay the Total Amount Payable by the payments set out overleaf, by their specified dates. Payment must be made to us at the address stated overleaf or to any

other person or address notified by us in writing. Punctual payment is essential. If you pay by post you do so at your own risk. If you mandate payment by debit card by way of a

Continuous Payment Authority and your payment declines you authorise us to take smaller incremental payments, on or after the mandated payment date, until the total

mandated payment is made. If Your CPA payment date falls on a weekend or Bank Holiday, you authorise us to take the agreed payment on the week day prior to the weekend

or Bank Holiday. You may cancel your continuous payment authority at any time. If you do this, you must arrange for another way to repay the amount owed.

2. Earlier payment by you

You have the right to pay off some or all of the debt that you owe us at any time. If you pay the outstanding balance under this Agreement before the date on which the final

payment falls due you will usually be entitled to a rebate of part of the interest. You must give us notice that you want to do this. If you want to pay off your debt in full, you must

tell us the date on which you plan to do this. You can contact us at Loans 2 Go Limited, Bridge Studios, 34a Deodar Road, London SW15 2NN or by phone on 0330 400 4381.

If you want to pay off the loan in full, we will provide you a settlement figure setting out what you owe. When you make a partial payment, we will first use it to pay any arrears or

overdue interest and will then apply the payment to reduce the term of the agreement.

sardonicraccoon

retiredbanker1 said:

It might be useful if you could put a copy here of your loan agreement (with your personal details redacted).
Loan companies are not allowed to frontload interest anymore - so (if allowed) any overpayments SHOULD reduce the overall interest charged.
I am thinking perhaps even the loan company staff do not understand the legality of their own loan agreements?

The £400 you have overpaid will not be lost - either they return it as you asked or it will be applied to the loan.

Is there anyway you can get regular credit facilities?
Even a bank overdraft at 40% or so would be cheaper than these loan sharks.

Thank you for your prompt reply, I have posted the agreement with personal details redacted above. I feel that the advice given by the loan company today does contradict the section at the bottom with regards to early repayments.

I'm unable to get any other credit at the moment, but I should be able to save a decent amount per month to get this paid off early.

retiredbanker1

I have quickly read the agreement and cannot find anything to suggest they have front loaded the interest.
It also seems quite clear that they allow overpayments.

I would make a complaint about the phone call that you received.
Get some accurate information of how to over pay and how they deal with the payments.

Finally get rid of this loan as soon as you can the interest rate is mind-boggling!

sardonicraccoon

Thank you for your time, it really is appreciated. It was an email which stated “Please note that as the interest is frontloaded, overpayments will not reduce your interest.” that sent me in to a bit of a tailspin!

And yes I intend to pay off as soon as possible, as well as the £400 payment, I will have another few hundred to pay before the next instalment is due due to selling some possessions and hopefully I can continue in this vain by paying as much of my remaining salary as possible until it is done and dusted. 

mjm3346

I presume this is "front loading"...The rates of interest which apply to the credit agreement. Interest is charged at a simple fixed interest rate of 111.60% per annum on the amount of credit for the term and is applied to the account, in full at the commencement of the agreement.

CliveOfIndia

mjm3346 said:

I presume this is "front loading"...The rates of interest which apply to the credit agreement. Interest is charged at a simple fixed interest rate of 111.60% per annum on the amount of credit for the term and is applied to the account, in full at the commencement of the agreement.

That's how I read it as well.  And I can only assume that it's very badly worded, I think (at least hope) what it's trying to say is that it gives you the total figure you'll repay if the loan runs for its full course.  But front-loading of interest has been illegal for many years now, so you have to save interest if you repay early.  Despite what the misguided communication from them seems to indicate.

ManyWays

A "simple fixed interest rate" of 111% can work out at an astonishingly high APR.
Have you looked at making an affordability complaint about this, it looks a lot more expensive than a payday loan?

sardonicraccoon

I have received further ‘clarification’ today stating that

“Should you make any additional payments on top of your contractual repayment, this would reduce your balance outstanding and the time your loan agreement is active for, however, it would not reduce the total amount payable. Once the total balance outstanding/total amount payable is received, we can proceed in completing and closing your loan agreement.”

I’m not sure this is correct, however I’m clearly not an expert in these matters!

I have requested the overpayment be returned, I will add this to the other sum I have saved and should be in a position come pay day to request an early settlement figure and get this paid off. 

They also stated “Please be reminded that that the interest is frontloaded, which means that all the interest that will become payable over the loan term is added at the beginning of the loan term. This makes the agreement more transparent as customers who may have little experience dealing with complex financial matters can immediately see how much they have left to pay to clear their outstanding balance, rather than having to factor the accrual of any further interest into their calculations” which made me chuckle. It seems that everything they do is more confusing than regular lenders. 

Definite lesson learned, but a swift payment should ensure no long term pain!

Thanks again for everyone’s comments so far, it’s all been a big help. 

saajan_12

sardonicraccoon said:

I have asked for the £400 to be returned on this basis but I’m not sure this will be honoured so now feel I’ve thrown a chunk of money down the drain. They have given me an early settlement figure today of £1312.58. 

If it helps, the loan started on 07/01/25, and to date I have made 1 payment of £202 and what I thought was an overpayment of £400. 

u 

Even if they're phrasing it in the same way, might they be essentially offering you the same as overpayments? 

If you overpaid the balance and terminated today, you've essentially had the loan for 1.5 months (7 Jan -> 20 Feb) which would have incurred 111% x £1500 x 1.5/12 = £208 simple interest. Plus the £1500 makes it £1710. 

You've paid £202 + £400 and would pay the early settlement figure of £1312.58 = £1714. 

I know you can't necessarily pay it right now, but it sounds like their maths does work out to be the same as if it was treated as overpayments. So if you reached out again when you could pay off in full, the revised settlement figure might be in line with your expectations as if you overpaid.