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Original poster

£2300 to settle a £1850 loan?

10 replies

ASecretLemonadeDrinker · 07/08/2010 20:08

DH got a loan for £1850 a few months ago. We wanted to settle it and assumed at worst it would be £1500 left, but they have said it's going to cost £2300 to pay off. No payments have been missed

OP posts:

madamebovine · 07/08/2010 20:13

How much will it cost if you keep making the payments? (Is it £1850 or was that the original loan?)

Original poster

ASecretLemonadeDrinker · 07/08/2010 20:18

6240 :(

OP posts:

bubblerock · 07/08/2010 20:22

Whats the maximum monthly repayment he can make without incurring a charge? Not unusual to have an early repayment charge unfortunately

madamebovine · 07/08/2010 20:27

Mmmm I think that whatever is the cheapest is going to be the best option. gutting isn't it?

Original poster

ASecretLemonadeDrinker · 07/08/2010 20:30

not sure about over payments, will call on Monday. I guess we will have to clear it, if I knew it would cost an extra 500 in addition to the payments already made just a few months later I wouldn't have bothered!

OP posts:

SparkleandShine · 07/08/2010 20:32

Depends on the terms of the loan. I worked for a sub prime lender who would "front load" the insurance payment, so lets say you took a loan for £1850, the payment protection insurance (PPI) would be £600 for the full term of the loan (to cover redundancy, non-payment etc) so a loan would then become £2450, then interest added on to the full amount.... its a bit of a scam really as you end up basically getting an 'extra' £600 loan for the PPI and paying interest on it...

so if it needed to be repaid early you would then repay ALL the insurance....which I think is what is happening here.

He MAY be able to complain about it, if he can sucessfully argue he was unaware of the insurance componant, but if he signed the docs accepting it then he is liable. (nonetheless worth complaning anyway as finance companies very scared of misselling PPI as big fines if they do so may reduce it if you make a fuss IYSWIM)

lal123 · 07/08/2010 20:33

Jeesie peeps! Who's loan with and what is interest rate?

atswimtwolengths · 10/08/2010 12:16

If you have had PPI added but were unaware of it, you can reclaim it. I've done this on a couple of loans, where the bank had added it and said 'sign here'...

If that's the case, then get over to this page - the advice there (particularly on the forums) is fantastic.

cowboylover · 10/08/2010 22:26

Unfortunatly not unusual, from there point of view they where expecting to make thousands of pounds from you in the next few years so think thats why they think its ok to pile on the early charges.

snoozathon · 16/08/2010 13:41

Oh that's awful for you :(

Unfortunately when you take out a loan, you pay for it, you understand that. They charge you £x to borrow it, the £x doesn't disappear if you decide to pay them back sooner. It's how they make their money - as soon as you take out the loan the interest is added on, so it will take a while to even get back to the figure you borrowed. It honestly could be worse - they could charge you the total interest now, they are actually discouting it for you for paying off early IYSWIM.

It's always worth asking what the minimum and maximum settlement values would be on a loan. I've been stung in a similar way, although the interest rate on the loan you took out sounds absolutely hideous, at least you won't end up paying over 6k for it if you can pay it off now!

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