Help needed with the maths- lendable loan near defaulting

GeekieGirlie

I feel I may have to contact my creditor to explain this to me as I’m confused so thought I’d ask here first incase one of you may understand it. I dont want to make contact with them if can help it as I’m one month away from getting my default notice. But I can’t work the maths out.  

I have 2 lendable loans. 

Both I have missed 4 payments. 

Loan 1 took out £2000 in August 2021 interest 38.8% per year over 60mths. They have now increased my months left to pay by 4 months and my balance is a little higher which is obv due to the arrears.  November the main balance with interest was £1649 then I stopped paying and now is £1293 in the payment history section and £1927 in the main page which I presume is the full term amount with the interest added. I expected all that. 

However loan 2 

I took it out in July 2023. A loan of £2000 for 60mths. With interest of 46.5% per year. 

I have paid 15 months out of 60 so in November before missing payment it said I had 45 months left to pay off and my main balance with full term interest was £3622. 

Today I have looked and now says I have 66 months left to pay so more than I took out and the balance is £2027 in the payment history but the main page says £5143 which I presume is this the £2027 with the full term interest? Im unsure is that right? I don’t know how to work it out but I’m worried why is so high. 

I don’t understand why the main balance is so high on the 2nd loan and why the payments are 66 months now.  The first loan with them hasnt changed that much so confused why this second has. I thought they’d just add the 4 months in to it.  Can anyone help me work the maths. Do you think this is correct? An increase of £1500approx in 4 mths seems so high. 

And when it defaults which balance would I be liable for the £2027 balance or the £5143 with the full term interest?  Because if it’s with the full term interest added I am panicking my balance will be sky high by the time it defaults!  

Organgrinder

The 66 months is from taking your existing payment and applying it to the outstanding balance. With you owing more, if your payment stays about the same it will take 66 months to pay it off.

66 x your payment = £5143

45 X your payment = £3622

Approx.

With such a high interest rate, after 15 months you've only paid off £107, so if you miss two payments you'll end up  adding about £73 in interest every month.

GeekieGirlie

Organgrinder said:

The 66 months is from taking your existing payment and applying it to the outstanding balance. With you owing more, if your payment stays the same it will take 66 months to pay it off.

With such a high interest rate, after 15 months you've only paid off £107, so if you miss two payments you'll end up  adding about £73 in interest every month.

Oh crikey ok. Thank you. Do they keep the full term interest on when it’s defaulted? 

Organgrinder

Sorry I edited my post so you can see the difference.

I assume when you defaulted, even if only for month, there is the interest added (say £73) plus a default charge. After 15 months you've paid about £1250 of which £1140 approx is interest.

So you still owed £1890. Add the interest and a default charge and bang you owe more than you started.

I think if you default now you'll owe the current balance only. But you best wait for someone else to answer that one.

GeekieGirlie

Organgrinder said:

Sorry I edited my post so you can see the difference.

I assume when you defaulted, even if only for month, there is the interest added (say £73) plus a default charge. After 15 months you've paid about £1250 of which £1140 approx is interest.

So you still owed £1890. Add the interest and a default charge and bang you owe more than you started.

I think if you default now you'll owe the current balance only. But you best wait for someone else to answer that one.

Ok great, thank you for that much appreciated  

ManyWays

Horrendous interest rates. Have you looked at making an affordability complaint, winning one will mean all interest is removed and you can repay at a lower rate.

sourcrates

I would do as suggested above by ManyWays, get a complaint banged in to them.

Once these debts default, all interest and charges will stop, the full outstanding balances will still be payable, but, what you end up paying will be dependant on the outcome of any complaint you make.

Either way the debts will be assigned to a collection company or may instead be sold, whoever gets them will basically accept whatever is affordable to you on a monthly basis, I think given the circumstances, that might be the better outcome for you.

GeekieGirlie

ManyWays said:

Horrendous interest rates. Have you looked at making an affordability complaint, winning one will mean all interest is removed and you can repay at a lower rate.

Thank you no i hadn’t consider this one I’d only done it for my credit cards and got rejected. I will try for these too. Thank you! 

GeekieGirlie

sourcrates said:

I would do as suggested above by ManyWays, get a complaint banged in to them.

Once these debts default, all interest and charges will stop, the full outstanding balances will still be payable, but, what you end up paying will be dependant on the outcome of any complaint you make.

Either way the debts will be assigned to a collection company or may instead be sold, whoever gets them will basically accept whatever is affordable to you on a monthly basis, I think given the circumstances, that might be the better outcome for you.

Great thank you. I will do that and get a complaint sent to them. Can try at least with it! 

ManyWays

GeekieGirlie said:

Thank you no i hadn’t consider this one I’d only done it for my credit cards and got rejected. I will try for these too. Thank you! 

You can also send the credit card rejections to the the Financial Ombudsman Service if you think the limits were too high for you to be able to sustainably repay the debts 

GeekieGirlie

ManyWays said:

GeekieGirlie said:

Thank you no i hadn’t consider this one I’d only done it for my credit cards and got rejected. I will try for these too. Thank you! 

You can also send the credit card rejections to the the Financial Ombudsman Service if you think the limits were too high for you to be able to sustainably repay the debts 

I did think of doing this and got it ready to send but I don’t have any evidence to prove except bank statements. So feel they won’t accept it. The lenders rejected my complaint due to never having missed a payment or drawing cash so showed no signs of financially difficulty. I really only ever used it for food and fuel and used the balance as soon as it cleared. And I do have a letter to say I was in persistent debt, then the month after they increased my limit. So felt that would have been enough proof.