Hi everyone,

I'm sorry if this is a bit long and muddled, and "eye crossing", this kind of thing is not my forte. I've had loans before, but I've never been in the position to repay them early, so this is somewhat uncharted territory to me. I figured I'd be best to seek some advice to find out if I'm barking up the wrong tree before pushing on to the FSO.

So, here goes...

I took out loan for £2,000 last year. It was sold to me as "front loaded interest", fixed interest (39.9%), fixed term, no fees for early repayment. Fixed monthly payments, all the usual standard stuff.

The total amount borrowed inc interest over the term was £3,184.20 over 36 months.

Within two months of taking out the loan, I was in the very fortunate position to repay it.

At the time of my initial attempt to settle early, I'd made two repayments of £88.45 (totaling £176.90)

When I asked for a settlement figure the amount the company came up -with the "interest discount" applied- was £2,040.54.

I thought this was a little odd at the time since I'd made repayments, and I'd (foolishly) expected the settlement to be under £2,000, at least by a couple of quid.

Due to work issues, I didn't settle the loan immediately or within the month that the figure was valid and so I had to call up again the following month, after another £88.45 (making total repayments to date £265.35) had been paid to them, and request another settlement figure.

The settlement figure this time came back to me as £2,002.37.

Since they'd had another payment, I was pretty surprised to find the settlement was still over £2,000 and that I was still left owing them £2.37....

Since I understood this loan to be fixed interest, set term, it implied to me that each repayment I made went partially towards the interest, partly towards clearing the actual capital borrowed.

So how come when I attempted to settle the account, thus having the full terms interest removed from the total owing, am I still left owing this company more than I'd borrowed?

Does this not suggest that all my repayments have been gobbled up by the company and considered "interest only"?

What happened to the £265.35 I'd made in repayments, if not one penny of it was applied to my balance?

I've looked through the terms and conditions, and frankly they leave a lot to be desired. I have requested a statement from the company in question, which they insisted would show how the interest/repayments were applied to my account balance, but what they sent me is just a list of the payments I've made, no explanation for how they were put against what I owed.

The company themselves are being very shady and keep hiding behind their "system" whenever I try to query where my money has gone with them. (It should be noted that they've just validated another complaint regarding an adjusted repayment figure with them after I'd made a partial settlement on this loan, but that's another story but it goes someway to show that they're not being clear in their T&C's.)

Now, my understanding of borrowing/repayment is pretty basic, but given the settlement figures especially, I've come to conclude as follows.

Loan amount: £2000.00
Interest added: £1,184.20 over 36 months.
Total borrowed: £3184.20
Divided by 36 equals monthly repayment amount: £88.45

Interest of £1,184.20 ÷ 36 = suggests £32.89 a month goes towards interest.
Monthly repayments at £88.45 - £32.89 = suggests £55.56 remaining from each instalment towards capital borrowed?.

So why has a payment of £88.45 only reduced what's owed by £38.17?

And if only £38.17 is the amount that's put against my capital balance each month, then three payments of £38.17 would equal £114.51 which then surely means I'd be left owing £1885.49 not £2,002.37? Am I right, or wrong?

At this point in time, it seems to me that this company has taken all my repayments towards "interest". Which would make the loan I signed up for an interest only loan, at least for a fixed term. Nowhere in the terms and conditions does it clarify this is the case.

I get the impression I'm missing a trick, and perhaps that it "goes without saying" that all payments made prior to early settlement are deemed as interest only, but if that's the case then surely that should be specified in the T&C's under the FCA's guidelines?

So what happened to the repayments I made? I was told there would be no fees for early repayment, but it seems to me that there has been, at least in a hidden/indirect sense.

Am I being thick, or is something amiss here? Do I have good grounds to launch a complaint against this company with the FSO or am I overlooking something that allows this company to keep all of my repayments and still ask me for more than I borrowed?

Thanks all.