Have paid £8,000 but still owe the same!!!

maralum

Hello all,

Ok, I may be having a very dense moment, but I just can't work out the maths.

5 years ago I took out a loan for £5,000. A year later, I upped it to £6,00. Another 6 months down the line, I extended it again to a loan of £11,000. Familiar tale anyone?

During this whole time, I was making payments which over the years have added up to £8,000. We're now in a DMP, but when I asked for a balance for my loan, I was told that the balance still stands at £10,500. So where in the name of all things good did my 8 flipping grand go??? :eek:

Sorry if I'm being a total idiot, but I just can't work out how I could have been making payments for so long and have paid off so little.

Any replies welcome. What should I do?

Mara.

dhassen

I suppose it depends on the APR of the loan? so in 5 years only £500 pounds has been paid off? The interest to payment ratio must've been really bad... so you've paid 8500 to pay off 500? What where the payments and APR?

maralum

Thanks for getting back to me, the interest is at 16.9 (I know, horrific, I took these loans out when I was too young and stupid to know what it really meant). The original payments on the £5,00 were £272 pcm over 5 years, the payments on £6,000 went to £169 pcm over 5 years and the payments on £11,000 were £172 over 10 years. Now that we're on the DMP the interest was supposedly frozen (I just rang the lady at lloyds who kindly informed that this is not so - I'm being charged £51 pcm interest and only paying £79!!!).

I know I'm not mathematically minded, but something feels weird here. The re-finance for £11,000 was at 16.9 and so far I've paid £3,419 since taking it out, but only £500 has come off the balance. I'm stuck.

msmicawber

I suspect also that each time you upped the loan you may have been charged some sort of arrangement fee. Do you have the paperwork?

dhassen

sounds really iffy here..... sounds like you've been paying some insurance on the loan maybe? Perhaps without knowing?

maralum

I don't have the paperwork I'm afraid. I just wish I hadn't been so young and thick. There may have been PPI, I'm just not sure. Now it looks as though we'll have to go down the bankruptcy road. Our DMP isn't getting us anywhere and DH has lost his job. I really feel like an idiot.

I just wish that I better understood how it works.

dhassen

Hopefully some other people with knowledge / experience of DMPs will come along to help..I don't know anything about them... don't feel like an idiot we all make mistakes

woozywendy

It looks like your loan is front loaded so all you have been paying is interest and possibly ppi if you have it. Meaning that the bulk of your money every month has gone on interest and ppi and a very small amount on the loan. I know the halifax do this as I learnt to my cost a long time ago. Tesco do not they spread the interest and ppi out equally over the term of the mortgage. I would get in touch with them and ask for a detailed statement of how the monthly payment was broken down.

woozywendy

Sorry I put mortgage:eek: instead of loan. Do not know where my head is today

msmicawber

Well, I'll see if I can help a little, but it's not really my forte either.

Your original repayments were £272 per month for 5 years, so 272 x 60 = £16,320.
£169 pm for 5 years (169 x 60) = £10,150
£172 pm for 10 years (172 x 120) = £20,640.

Without knowing whether you were also paying PPI, it's hard to be absolutely sure what the APR on the loan was at any point. Since the interest and PPI payments tend to be taken first, I think that's why you've paid off so much yet barely touched the original loan amount.

RAS

Hi

if there is PPI on the loan, it may kick in and cover the costs now OH has lost his job, or was it in your name only.

if it does not cover the debt, then you need ot reclaim the PPI. That will

Cut the amount owed and the repayments down and the payments will go towards the debt not the PPI.

if you have not paperwork, you need to do a CCA. That should show up the PPI, and at a guess it wil, be a single premium for 25-30% of the cost of the loan.