loan settlement

[penniless]

Back to this loan!!!! please please please someone help me a solicitor, financial advisor or ex Lloyds tsb employee!!! I have a loan for �12004 i pay �257 a month the APR is 11.9% (yeh i know) it is comprised of 207 payment and 50 pounds loan protection a month. They gave me the loan even though i only earn 640 pound a month (I live with my partner therefore i survive) But have they given this loan to me illegally and broken rules as quite clearly with the cost of living i cannot afford to pay this loan back. its over 6 years 5 to go. i went in today for a settlement and they quoted me 11836 pounds STILL to pay. i was quoted on signing up for this loan that "lloyds tsb loans are not front loaded with interest" this looks to me like it is, as i have only paid �168 off of my loan of �12004 in 1 year. I can quite clearly see i'm being done over but 5 years of only paying �168 off of my loan does not make me �12004. Please help me so i am armed with some advice to hit them with when i go in to query it.

thank you

[vicars]

Strangely enough I trained as a solicitor, used to work for LLoydsTSB and became a financial adviser, so I feel oddly compelled to answer this. The bottom line is you were given information about the loan which you should have read and indeed signed for. However it become a grey area when you rely on their verbal assistance which is wrong in some way, i.e. they do not front load protection premiums. By my calculations in the first month, without premium protection you would have paid off �115. As each month goes by you will pay a little more off, so you should have paid off at least �1400 in 1 year. You can therefore work out what you have paid towards premium protection. You need to argue that quite clearly you are paying up front for it. However your local branch will not be able to help with the complaint, apart from log it and send it to customer complaints. Ideally you need to speak to customer services about the loan, but going in branch will not hurt and at least they can try to fob you off (only making you more determined). As for lending you the money in the first place, it is up to them at the end of the day, but if the lending clearly is well beyond your means there may be a valid to complaint to be made under the Banking Code etc that they have not leant responsibly. Only recently they ageed to cancel several loans totalling tens of thousands of pounds given to a couple in dire straights. Best of luck. If I think of anything more useful I will post it asap.

[stevie21]

When you got the loan did you receive �12000? If so, and with FIFTY QUID !!! a month loan protection then it's right that a settlement figure will be very high. If you borrow such a large amount then the total amount repayable over the entire 6 years will be something like �18K or more.
I'd base your calculations on that type of figure rather than the initial �12K.
If you ask LLoyds for a breakdown of future payments and they're ALL �257 then your repayment plan clearly is not front loaded.

I'd be interested to know if you believed that you couldn't afford the loan (as you do now) when you originally applied for it in the first case. If so, don't tell Lloyds as they might argue that you applied for it under false pretences and tell you that's illegal.
Also, *If* you were to earn �2000 a month but have so many bills that there's only �640 disposable income then Lloyds might say that you can afford a loan of �257 a month. How much of your �640 goes on other bills?

Finally, if you can't rejig the loan to reduce the payments you might want to try to get the loan protection removed or taken out with a competitor to save a bit.

[hinge1967]

It may be worth seeking advice from the Citizens Advice Bereau or www.cccs.co.uk . Both are charity organisations that provide debt advice, often the will negotiate with the bank on your behalf and financial instituations are obligated to communicate with them.

[gordy_b]

As a person who works for a bank (not TSB however) I would surmise that you were perhaps lended the money irresponsibly.  Where I have worked, before credit score is taken into account, first and foremost affordability must be there!  However if you told them at the time that you lived with your partner and paid no rent or lodgings and paid no other loans then you may be at a disadvantage.

Anyway, firstly APR is not the most accurate method to compare the cost of loans as it can be calculated in approximately 50 different ways, so ask what your flat rate of interest is to gain a true idea.  Secondly when a loan is set up, the interest may not be front-loaded, but when you make a payment a certain percentage will go to interest and the remainder to the capital (the amount you borrowed).  If your loan is on a fixed rate, the interest rate will never change, but the amount you pay off the capital will increase as the interest will become continually lower through the course of the loan as it will be in relation to the capital still owed.  Basically you will get a fright if you ask for a settlement figure when only a short term through the loan.

With regard to loan protection, it is quite possible that this will be front loaded as it is a seperate item paid for by additional funds quite commonly at the same rate as the loan.  Under the FSA regulations, if you were to pay the loan off early you would be entitled to a refund of the loan protection you have not used if indeed the premium amound was front loaded.

[khana]

Hi there, I used to work for Lloyds TSB in the lending department and I will try to explain how there loans work

When you take a loan with insurance, you effectively borrow the full amount of the loan insurance over the period of time chosen as well as the capital amount you actually wish to borrow. You are charged interest on both these amounts over the duration, however the money for the insurance is paid in full to the loan company at the begining of the loan.

Whats probably happened is that you were given the correct repayment figure, however, they should have explained that a seperate rebate would be made from the insurance company which normally takes a couple of weeks and is paid to you afterwards.

Of course, its also the case that you owe more money at the start of a loan then at the end, so proportionaly more of the repayments you make will go towards the interest then the capital, During the full term of the loan, as the balance drops then more goes towards the capital.

You should have been given a loan agreement form to sign and keep a copy of when you took out the loan which explained this in the numerous terms and conditions.

If you are unhappy, then please go back to the Bank and ask them to explain it to you to your satisfaction, thats what they are paid for.

[penniless]

thanks for all your replies very helpful. have been in to the bank and she said if i have a greivance hten i should contact customer services. she also said the recent t.v programme expose on their loans was on loans released a few years ago and now all their loans have a lot more checks to go through. My salary monthly is ONLY 640 as i am a trainee hairdresser just qualifying. she did explain to me that my loan wasn't front loaded and that it is a shock if you do an early settle as your first year you do pay a lot of interest. at the moment it is a daily interest rate and it is �4.25 per day going on so i pay �131 a mth in interest and the rest is made up of loan and bringing down the cash sum. So anyone got any good loan companies out there who don't front load there loans and have a lower interest rate. ive found a few loans that seem good cooperative, tesco finance and cahoots. anyone dealt with any of these and have any good or bad experiences please let me know. thanks

[jean88]

What does the �50 loan protection covers? Sickness, unemployment, and what else?

[gordy_b]

In response to Jean88, commonly loan protection will cover sickness, accident, redundancy, life and critical illness. 

Most will not cover sickness caused by what is termed to be a pre-existing medical condition i.e one that the policy holder knew about before cover started.  Also many will require the sickness period to be for more than 30 consecutive days, so being off work through a cold or flu for a couple of weeks are unlikely to be covered.  Life cover will not pay out for anything caused by the policy holder's own willful actions (suicide), drug or alchohol abuse.

The exact details are dependent on the wording of the particular policy.