Advice on an old loan

Supermullyman

Hi Guys, looking for advice on an old loan I have with a bank.

Basically I took a loan with them in 2010 to consolidate a small loan and a credit card (I cancelled the credit card at the same time). At the time, as far as I remember, I was told it was a fixed rate loan over a period of 7 years. I have since switched current accounts and apart from a few blips along the way have kept up regular weekly payments.

To my knowledge the loan should have ended this month and I contacted them to get a final balance, expecting €100-200, however they have told me that the balance is actually €1350. This, they explained, was due to an increase in APR over the years which wasn't reflected in the weekly payment. When pushed about the fixed rate, the lady explained that standard practice is not to increase the weekly payment but to extend the term and that is what was meant when they stated "Fixed Rate"? When I asked about why I was never notified about the increase in interest I was told that it would've been on statements and "it was on the news" and "it was all in the terms and conditions"

I guess my question is what are my options here? I can't place my hands on the original documentation just yet as it got buried somewhere during one of 3 house moves, but the idea that they can increase the term of the loan spuriously via interest rates just to make more money out of me seems ludicrous!

I really don't want to default on a loan (I never have) but at the same time I don't see why I should have to pay ~€1100 more than was originally agreed.

Do I have a case to complain here or is it a case of "you made a bad call, just suck it up"?

Any advice gratefully accepted!

Toots

AFAIK you can request the copies of the original documentation from the bank. If you make a written complaint, they'll most likely have to pull out the original docs themselves to check over what you signed up for.

Just make sure you're not confusing fixed rate with fixed repayment. If it was fixed rate, you'd know in advance what your rate was going to be, and all your repayments would be the same for the term of the loan. If it was fixed repayment (but possibly a variable rate) then what would happen is that your repayments would remain the same but there might be a balance left outstanding at the end of term, which would mean they'd need to extend it to allow the loan to be paid off. Conversely, if the interest rates had dropped significantly, the loan may be cleared before the term is up, so your repayments would stop early in that instance.

The best bet is to submit a request in writing to the bank and ask them to send you copies of your original credit agreement (and try to lay hands on your copy while they're pulling out theirs) and then go from there.

Supermullyman

Thanks Toots,

Yeah, maybe I'm confused in my head about fixed rate and fixed repayment. I'll keep digging around for the docs. In the meantime I've asked for a full statement of account from them, if I can't place the original docs I'll request them (didn't know if I could do that)

Thanks for the advice

Trish56

The only way rates went since 2010 is downwards so it will be hard for them to justify rate increases in the interim. I think also but stand to be corrected that you should be advised of any change in interest rates in writing. Also your Annual Statements should show the interest rates charged.

Once you checked the terms and conditions of your loan if not satisfied make a written complaint to the Bank advising them if not sorted to your satisfaction you will be referring it to the Ombudsman.

Best of luck.

newacc2015

Trish56 wrote: »

The only way rates went since 2010 is downwards so it will be hard for them to justify rate increases in the interim. I think also but stand to be corrected that you should be advised of any change in interest rates in writing. Also your Annual Statements should show the interest rates charged.

I know people who has platinum credit cards, where the interest rate was 10% in the mid 2000s when the ECB rate was 5%. Their platinum card is now 17% as it was increased since 2008

The bank can justify the increase with the increased amount of credit risk and bad debts on credit cards

Supermullyman

Hi Trish56

That's what I would have thought (re interest rates) but I don't think I've ever heard of an interest rate reduced on a loan that wasn't mortgage! Banks eh?

As far as I can recall I only received 2 statements over the last 7 years - they do have the interest rate on them but until I dig out the original docs I won't know if they are increased or not.

I'm thinking that I'll get the original docs from the bank, make a written complaint and then try and see if I can get them to meet me in the middle on the remainder. If anyone's interested the original amount was 12,500 and so far I have repaid ~17500, with ~17700 being the original repayment amount. They are now looking for that to be ~18900 in total

Thanks again for the advice

Supermullyman

The bank can justify the increase with the increased amount of credit risk and bad debts on credit cards

Ain't that the truth! Despite this risk or bad debt being nothing to do with me! Banks and Insurance companies....

Trish56

I don't think you can compare a short term personal loan with credit cards. The OP got a personal loan and should have received annual statements showing interest rates. The Central Bank must have some regulation that a consumer must be made aware of interest rate increases.

newacc2015 wrote: »

I know people who has platinum credit cards, where the interest rate was 10% in the mid 2000s when the ECB rate was 5%. Their platinum card is now 17% as it was increased since 2008

The bank can justify the increase with the increased amount of credit risk and bad debts on credit cards

Supermullyman

Thanks again for all the advice guys. Going to meet with bank on Monday morning to discuss. Interestingly from looking at the statements they sent the initial interest rate was 11.38%, this jumped to 12.38% after just 1 year, and then to 12.63% the next day!

I'll let you know how I get on

Supermullyman

A long time later and I'm finally sorted! Branch kept fobbing me off on to the consumer collection department and vice versa. After several months of this, I finally got talking to someone in the collection department who knew how to use their system!

Despite being told they had no access to documentation, statements etc, this guy was able to pull up the signed copy of the original agreement in a matter of seconds and reference the part where it states variable rate loan - in the very small print of course! He also sent it to me for my records.

Long story short, I had to pay the additional amount due but they agreed to waive all interest fees that had accrued since the last payment and remove any notes on my credit history.

I still feel I was missold the loan at the beginning but I guess this is just a(nother) valuable lesson in reading the small print before signing!!

Thanks again for all the feedback and help - yis are a sound bunch!