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  • FIRST POST
    • Amberelli
    • By Amberelli 5th Jul 18, 4:40 PM
    • 58Posts
    • 992Thanks
    Amberelli
    Any Rules on Highest Interest Balances being paid first?
    • #1
    • 5th Jul 18, 4:40 PM
    Any Rules on Highest Interest Balances being paid first? 5th Jul 18 at 4:40 PM
    Situation: A secured loan taken out approx. 12 years ago.
    Several payments were missed. (Someone in charge of the payments didn't make them on behalf of the borrower). Yes, he should have checked and been in charge himself but trusted this person!

    When the borrower realised that they had defaulted, the loan was overpaid by 100 a month in order to try and make up the deficit. This has been the case now for 6 years. Lots of charges had also been applied to the loan balance.

    I am told that the loan company did not not allocated to the highest interest and therefore the balance did not go down very quickly.
    Now, instead of having 4 years left to pay off the loan - there is another 7!

    Before I get all the information and attempt to try and get the company to address this - can anyone advise whether the company are obligated to pay off the highest interest first - as I understand is the case with credit cards for the last few years?

    Thank you for any advice on this!
Page 1
    • zx81
    • By zx81 5th Jul 18, 4:43 PM
    • 19,421 Posts
    • 20,764 Thanks
    zx81
    • #2
    • 5th Jul 18, 4:43 PM
    • #2
    • 5th Jul 18, 4:43 PM
    A loan would only have one rate.

    Payments will be applied to the arrears and charges before the capital.
    • Amberelli
    • By Amberelli 5th Jul 18, 4:56 PM
    • 58 Posts
    • 992 Thanks
    Amberelli
    • #3
    • 5th Jul 18, 4:56 PM
    • #3
    • 5th Jul 18, 4:56 PM
    Thank you - I will get some more information from the borrower. The impression I was given was that the charges were a higher interest rate - but I could be wrong.
    • Tarambor
    • By Tarambor 5th Jul 18, 5:14 PM
    • 3,840 Posts
    • 2,873 Thanks
    Tarambor
    • #4
    • 5th Jul 18, 5:14 PM
    • #4
    • 5th Jul 18, 5:14 PM
    The law was changed a couple of years ago but applies to credit cards with multiple rates on the same card.

    Even if the law has changed it wouldn't be applied retrospectively especially to a loan 12 years old.
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