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?

Was it an endowment mortgage?

(With those you pay interest only, but also take out a life insurance policy to repay the capital borrowed when the policy matures).

Second the Moneysaving expert suggestion.

Search for Elderbridge in the loans and debt sections of the forums. There's reference to a dedicated financial ombudsman team and you can complain via the Resolver free tool.

If you see it through, I'd expect that you can get a substantial portion of the outstanding amount written off or even have some of the money you've paid up to now refunded as £70k repaid against a £50k secured loan is already more than enough.

It wasn't an endowment mortgage, it was a loan.

@AutumnDragon

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?

This right here ^ the loan amount would have been £62k, not £50k

When you got the £12k refund did you pay it off the loan?

@Bushkin

When you got the £12k refund did you pay it off the loan?

OP already answered that - no.

Why do you say you owe £50K, then say the settlement is £41K?

It seems right on a value of 62k (50k + £12k).

Use this calculator: www.moneysupermarket.com/loans/calculator/

@Cocomarine the original loan was 50k but 12k added on as ppi which I wasn't aware of at the time so it was refunded at a later date.
Stupidly didn't pay the 12k towards the loan, although I still have 7k in savings.
I was told that if I settled the account this week I need to pay 41k
I was also told that if I paid off a lump some of say 10k then the monthly amount would stay the same but for a shorter term, but they couldn't say how long.

How many months break have you actually? You said only 2 in 15 years, then you say you had 3 month off when furloughed - so that's 5 months yes?

Yes 5 months, 2 with Barclays as payment holidays and 3 with elderbridge for furlough

[quote Stressypantsagain]@Cocomarine the original loan was 50k but 12k added on as ppi which I wasn't aware of at the time so it was refunded at a later date.
Stupidly didn't pay the 12k towards the loan, although I still have 7k in savings.
I was told that if I settled the account this week I need to pay 41k
I was also told that if I paid off a lump some of say 10k then the monthly amount would stay the same but for a shorter term, but they couldn't say how long.[/quote]
In addition…..So GBP12k was solely the PPI? And are you saying you got back exactly GBP12K? Because if so that is not correct. You should have also got back the interest that you would have paid on that GBP12K up to the point of refund and also a statutory 8% interest per year on both of those amounts (which you may also be able to claim tax back on). You should have got a detailed repayment letter detailing all of this when you received the refund.

@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?

There's more than one way to apply interest to a loan. This is why it's extremely important to look at the Total Amount Repayable in the loan illustration before taking it out.

I wish they would teach this in school, it should be part of Basic Adulting.

But what does '12k added on as PPI' actually mean. Are you saying you borrowed 62k in total? I don't think that is how PPI worked. Wasn't it just an increase to you payments to provide some insurance which you probably didn't want, need or understand. If you did borrow £62k then that doesn't make sense to say that they gave you that 12k back as then they would have given it you twice, once as part of the original loan and then again when you said they refunded you.

Is it possible that the loan was 50k and it was the repayments which included PPI. You were then given 12k as part repayment of some of the payments you made and part compensation for mis-selling of PPI. If so then you have paid less than 70k as some of the 12k (the bit that was not compensation but a refund) should be offset against this to work out how much capital and interest you have paid altogether. You really need to get hold of some documentation as without that it's impossible to know what has happened.

@Mumski45 when people took out PPI the value of the policy was added on to the loan. So the OP took £50k loan and £12k PPI. She only received £50k because the rest was the insurance policy.

When the OP was refunded the £12k, she could have repaid that into the loan to but didn't, so although she didn't have PPI anymore, she is still paying for the value of it because she's chosen to use that money elsewhere.

Are you saying you borrowed 62k in total? I don't think that is how PPI worked. Wasn't it just an increase to you payments to provide some insurance which you probably didn't want, need or understand

That was how PPI worked, which was why it was a huge scandal. It was ridiculously expensive, applied as a single premium at the beginning of the loan and imposed on people often in desperate circumstances who were made to think it was the only way they'd be able to borrow money. There was a load of commission involved, which is why it was so heavily pushed. Plus there was a load of people who would never have qualified for the payout, eg self employed.

There's more than one way to apply interest to a loan. This is why it's extremely important to look at the Total Amount Repayable in the loan illustration before taking it out

In this case, the total amount repayable wasn't stated, which is a basis of the complain that the OP has. Because if it had been there in big letters that she'd repay probably over twice what she'd borrowed due to the massively expensive PPI and interest at a much higher APR than the 6% flat rate would imply, maybe the OP would have thought twice about taking out the loan, however much she thought she needed it and it was her only option.

@Lougle wow no wonder it was such a scandal then. I never had one as it didn't make sense to me but I did assume it was a premium increase rather than an increase in value of the loan which you never received. The numbers do make more sense if the principal was 62k.

In this case, the total amount repayable wasn't stated, which is a basis of the complain that the OP has

On the basis of the OP's statement. I find it difficult to believe that Barclay's issued a secured personal loan in 2007 and didn't issue a loan illustration. I find it easier to believe that someone that took out a 50k personal loan neglected to pay attention to the details. There has been so much investigation of mis-sold PPI that the NWNF industry would have leapt on this if loans were being blatantly mis-sold by High St lenders.

Short version - I don't believe the OP has genuinely received no paperwork at all for this loan. I think they may have disregarded it, thrown it out, or lost it thinking it wasn't important.

Because if it had been there in big letters that she'd repay probably over twice what she'd borrowed due to the massively expensive PPI and interest at a much higher APR than the 6% flat rate would imply, maybe the OP would have thought twice about taking out the loan

Really? Tens of thousands of people take out loans every year that you or I would probably consider to be madness. But without basic financial literacy people just look at the amount of cash they're being given and the things/experiences they are buying with them. Inappropriate loans are pure gravy to the finance industry and largely sell themselves.

Email the guy who does Money Mail.
I kno the daily mails sucks, but the money mail column guy gets results.

Email them.

*know

Have you kept any of your paperwork, from the original loan, the transfer that Elderbridge or the PPI refund?

Single premium PPI added to the loan upfront was banned in 2009, even before the 2011 court ruling gave way to compensation. As your loan is 15 years old, it’s certainly it was front loaded.

But… even with the scandal that was PPI, £12K premium on a £50K loan would have been unusual. They certainly did go up to 25% and people weren’t told or were mis-sold - but did you really not ever get single statement from Barclays?

Anyway… if you had a front loaded premium of £12K, then your compensation repayment would have been far more than £12K.

It sounds like you’re exact about the £12K compensation as you even mention having £12K left. So either:

• you got £12K back including all the compensation elements and are just incorrectly stating that it was £12K applied up front (it was less)
• you paid £12K and your compensation was totally miscalculated. This seems very unlikely, both that your PPI was that high or the calculation so wrong.
• you actually got a much higher compensation but did your claim through a third party who took a massive chunk of it from you
• it wasn’t front loaded anyway, you’ve misunderstood that and assumed it was

It’s perfectly possible that you still more than you think, because you continued to “borrow” the PPI amount long after your compensation was paid.

Take any paperwork you have and go to CAB.

Do you remember how you got the PPI compensation?
Did Barclays approach you?
Or did you go through a third party?
My XH had PPI compensation from Barclays in 2014 (credit card not loan).
The letter broke the repayment down very clearly. I don’t remember all the boxes, but I vaguely remember A, B, C etc referred to in the letter and a table with them on the second page.
It included: refund of premium payment, refund of interest paid on those, 8% lost interest if you’d had the money to invest yourself (that was legally set).
It was very detailed and clear.

My XH got a lot back, and it was actually his own stupid fault for taking it out in the first place! He wasn’t mis-sold at all, but they’d reached the point of just repaying any application I think!

@BeforeGodAndAllTheFish

Email the guy who does Money Mail. I kno the daily mails sucks, but the money mail column guy gets results.

Email them.

I’d suggest that OP takes a step back and actually get her paperwork together first.

@DogInATent as a Barclays mortgage holder in the same sort of period (2009-2013 I think) with an additional Barclays account and a husband with a Barclays loan and credit card around then too, I also find it really hard to believe that no statements were issued.

Once the loan was sold on - yes.

But not under Barclays.

They must have been in contact at some point to tell you that your loan had been sold on.

[quote Stressypantsagain]@Findingneeemo
Sadly the 12k wasn't used towards the loan, desperately needed a car at the time. Still have 7k left tho in savings.
Have never received an annual statement![/quote]
So you received cash in compensation for the £12k PPI that had been added on to your debt, but you didn't put that money towards the repayment? Therefore your total starting debt would have been £62K, not £50K.

You don't say when your interest rate changed, or how long the payment holidays were but at 6.9% it would take you about 9.5 years of continuous payments to reduce your debt to £50K. You've got gaps in payments, and you probably continued to pay interest on the debt during those payment gaps. It's therefore not inconceivable that you still owe £50K.

At the start of a loan period the majority of repayments do go on repaying interest, and as you get towards the end of the period you begin to see the balance reduce more quickly. However, if your repayments and interest rate stay the same it is going to take you an extra 3.5 years to repay the debt (13.5 years from now, rather than 10).

If you are worried about the affordability of this, or if your payment holidays have been very short and you feel that the amount you owe has grown disproportionately you should definitely seek advice. Citizens Advice Scotland or Stepchange should be able to help.