Thread: Another "Screwing" Technique

Just to beware of...

When I used to work for a well known Bank, another way of screwing that little bit extra out of you was if you had a loan account,(perhaps a loan to consolidate borrowing or for a holiday). We used to be told that if the account holder wanted to close the loan early then the calculation was pretty straight forward....Capital plus interst from last interest Debit date calculated on a daily basis. Many a time I saw the bank adding stupid amounts onto the interest accrued but unapplied. I said things on many an occassion and was basically told to "shut my face" and this was for "hassle" value. I know that the bulk of this forum is charges related, but for those users who come across lump sums and repay loans early.....beware and do a fag packet calculation yourself. Obviously different Banks have different ways of doing things but in essence the calc is the same.....it could save you ££££

This also applied to other non-standard requests where we were told to charge what we thought.

Similar Threads:

• "Chorlton vs Barclaycard" or "How to make a quick tenner"
• Can I claim "Debit Interest" and "Service charge"?
• Lloyds "Final Response" means no "Stay"?
• Strapt "The Underdog" Vs HSBC "The Calculator"
• Received "good will payment" - but called "refund"

It's otherwise known as the "rule of 78" which has since become illegal and will no longer be allowed on existing loans from 2007.

Quite frankly over my period of years with the bank, I'll be honest in saying that I have never heard of this "Rule 78". What I am saying is that I came across many people who for one reason or another were increasing their own profitability viz a vis Bonus etc. It was common place to be told that in order that you were to receive your bonus next year, you had to acheive X pounds over the next 12 months by way of charges etc.
I am not whistle-blowing, but just gently warning people that did occur from time to time.
Most loans that I have been lucky enough to repay early - I've done a fag packet calc before calling /or sending the funds over to close the account.

Ahh ha......the plot thicken

hello,
i have paid many loans back early with the good old shabbey, if i have been charged for rule 78 can i write to my bank and demand the money back?

I have a £4600 hp loan over 4 years on my car, I have paid just over 2 years and requested an early settlement figure - just over £3500! The total amount owed is only £3900! I take it this is rule 78 in action!

Originally Posted by tomthumb

Did it state in your agreement that this would be applied?(rule 78). my loan said it would be calculated as set out in the consumer credit act 1974 and will be intitled to a rebate.(no mention of rule 78).This popped its ugly head only when i asked for an early settlement figure.

The problem here is, my loan provider should theoretically then have given me a copy of the "consumer credit act 1974" so that i can figure out any early redemption penalty? They obviously didnt!!

This possibly could be argued as an "unfair term in a consumer contract" by not actually making the early redemption penalties in clear language, and therefore you didnt know what you would pay back in regarding any early settlment???

Nope, rule 78 wasn't mentioned. The letter said the figure was calculated 'in accordance with the consumer credit act 1974, rebate etc etc', exactly the same as yours funnily enough.

I'm doing a voluntary termination, as the car isn't worth half the amount they want now anyway. I certainly agree though, nowhere does it mention rule 78, and you can argue that you wouldn't have taken out the loan in the first place if you knew that the company would apply this rule. Even if they did give you a copy of the consumer credit act, you still wouldn't have known they would apply rule 78 as they didn't tell you!

Hi, Voluntary termination is where you can give the car back without penalty after you have paid a certain amount of the total (usually half). I think if you have any insurances on the loan though you have to pay them (minus the rebate).

The figure you need to have paid is usually on the agreement, it's right on the front of mine. It applies to HP, I don't know about car loans in any other form though.

It will work out better for me as I can get a better model of my car for £1k less than the finance company want as an early settlement!

I'm 99% certain that the figure you need to have paid is half. So if you could hold on for another 6 months you can terminate the agreement and return the car. The finance company has no choice as it is a right. It doesn't matter if there isn't anything about it on the contract, it applies to all car HP as far as i know.

If this rule isnt illegal until 2007 is there anyway that i can request over charges ona settlement in 2005.

This has opened my eyes alot.

I am just about to file court procedings against Lloyds to produce all my loans i have ever heald , thier statements to date or closure.

I paid £4800 to LLoyds last year, at the time i did they knew i was ill and unemployed, and i was on reduced payments.

Could these extra charges go against anything legal regarding my financial position? I had been covered with a number form payplan although teh ywouldnt represent me as teh amouint was to low.

Thanks
BL

(Sorry spelling got keyboard problem, i dont think it can keep up with my typing )

Hi Breadline


Unfortunately rule 78 isn't unlawful (which is a disgrace in itself) - it's just a way for the loan company to (legally) rip you off blind for settling early. I would very much doubt you could claim them back as penalty charges.