Loan....surely I've overpaid?

[Stressypantsagain]

I took out a 25 year loan, I have paid 15 years so far.
Original loan was £50k plus £12k ppi on top which was refunded as I didn't agree to it.
In 15 years I've paid over £70k and they still say I owe £50k
Surely this can't be right?!!
Where would be the best place to go for advice?

Do you have the original Loan agreement?

It's a secured loan, not a mortgage.
I rang to get figures. I was told if I wanted to pay the loan off I would need to pay £41k plus interest and a discharge fee.

forums.moneysavingexpert.com/discussion/6298153/first-plus-loan-now-elderbridge#latest

Start by asking the. For a list of transactions on the account. Compare that to your own records of payment.

Then, update us. Good luck.

I’m going to PM you.

Write to them and ask for statements. Do it recorded delivery so they can't say they didn't receive the letter. I'd say try the CAB but ime they're not a huge help.

nope something definitely isnt right please update when you speak to them as im intirgued now but ask for a proper transaction page.
make sure theyve been putting every payment youve made onto it and work out whether they are cahrging you more interest than they should

If I understand correctly, you borrowed 50k plus 12k ppi so loan was actually for 62k?

If they gave you 12k and you didn’t apply it to the loan, then you would still owe the 12k.

Even so, looking at those figures, could it be an interest only mortgage?

I’d take some advice from Stepchange

It sounds like 6.9% is the flat rate and the APR is actually around 10.4%.
You should have been told the total cost of credit and final repayment amount at point of sale. It's also a requirement that you are sent an annual statement.
I'd pursue this through their complaints process and escalate to the FCA if the above points haven't been followed.

Flat rate vs APR
Whilst a flat rate is based on the original amount borrowed, APR takes into consideration the remaining finance owed.
Put simply, the amount of interest you pay is adjusted to the amount of finance outstanding.
So, if you borrow £10,000 over 48 months with an APR of 12%, the cost of interest would be reduced after the first year, to reflect the amount you have repaid.
With a flat rate, your interest is calculated based on the original amount borrowed.
Unlike APRR_, a flat rate does not consider the amount of you have paid-off. Instead, your cost of interest remains the same across each year of the repayment period.

How long were your payment holidays? You say it’s a secured loan. What is it secured on?

www.moneysupermarket.com/loans/calculator/

I looked on this moneysupermarket loan calculator. £62,000 (the £50k plus the extra £12 you received) over 25 years at 6.9% is a monthly payment of £426. This is lower than your payment but you have mentioned taking payment holidays which could account for this.

Did the rate change to 6.2% only happen recently?

Their figures could be correct if your loan is based on £62,000 rather than £50,000.

Although somebody might show me where I've gone wrong.

I've hopefully attached a spreadsheet showing the reducing balance of the loan, it is around the £41,000 you mention at about 13/14 years (rather than 15 years as you've mentioned).

The difference could be if you received the £12,000 at a later date than the £50,000 so less of it has been repaid yet.

The payment holidays were only for a month. I have taken 2 in the last 15 years (this was with Barclays, i don't think Elderbridge do holidays)
I had a 3 month holiday in 2020 when furloughed.
I honestly have not had annual statements but I guess it would be my word against theirs.
I've had loans before for smaller amounts and it's all been online so you could see what you had paid.
The loan is secured against my home!

6.9% is the flat rate of interest charged on the initial loan, per year. So 50000 x 6.9% = 3450. Then 3450 x 25 = 86250, added to the original loan gives a total repayment of £136250. Divide that by 300 gives the monthly payment of £354.
Op it does sound like the amounts quoted are correct, but that doesn't mean you've been treated fairly. If you weren't told the total cost of credit / haven't received annual statements etc, then you have grounds for a complaint.

Financial ombudsman?

financial ombipusman

*£454 not £354

@NEE1302

6.9% is the flat rate of interest charged on the initial loan, per year. So 50000 x 6.9% = 3450. Then 3450 x 25 = 86250, added to the original loan gives a total repayment of £136250. Divide that by 300 gives the monthly payment of £354. Op it does sound like the amounts quoted are correct, but that doesn't mean you've been treated fairly. If you weren't told the total cost of credit / haven't received annual statements etc, then you have grounds for a complaint.

Nee1302 - I feel really thick but that explanation is brilliant! I always thought interest rates on loans were like a black art but that makes perfect sense! Every day's a school day! :)

surely that's not how it works - the capital of the loan reduces over time so you wouldn't be paying 6.9% of 50k for 25 years?

@SausagePourHomme

surely that's not how it works - the capital of the loan reduces over time so you wouldn't be paying 6.9% of 50k for 25 years?

I think that would be true if it was APR. This sounds like flat rate interest.

@SausagePourHomme

surely that's not how it works - the capital of the loan reduces over time so you wouldn't be paying 6.9% of 50k for 25 years?

That's true of the APR, but it looks like 6.9% is the flat rate and the APR is something like 10.4% (APR gives a true reflection of the cost of borrowing so is the better one to use really. It's higher than the flat rate though, which is why some lenders don't use it - car finance companies being the biggest culprits)

@MagratsDanglyCharms21 thank you! I used to spend my working days picking apart lender paperwork - haven't done it in a good while!

Ahhhh right. Shit.