Thread: Firstplus - borrowed £50k/repaid £52k 3yrs later

Just having a flick about tonight and have seen some snippets of info on this but nothing exact so far, so thought I'd post.

I borrowed 50k from Firstplus in May 2004 on a 15 year term, secured against my property. Had to remortgage to cover a tax liability this year but Firstplus declined to issue a deed of postponement so I had to increase my mortgage application in order to repay Firstplus.

Their settlement letter arrived:

Total amount payable under the agreement: £81,423.01
Less our rebate on early settlement: £29,539.59
Plus admin charge: £150.00
Total amount payable by you to settle@ £52,033.42

I was shocked, as this more than I borrowed to begin with in May 2004 and had repaid about £17.5k over the previous 33 months.

Called them about it but they would not entertain telling me how the final figure was derived, or reduce it.

I would be interested in hearing from anyone who has been in a similar situation and managed to claim back a portion of the settlement fig, or if anyone knows whether or not there is a case to fight for some of that money back.

By my crude calculations, I think a more realistic settlement fig would have been about £48k?

James

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James31

Reidnet and myself have both taken issue with extortionate interest charged by FirstPlus who have been calculating the interest on loans using the recently defunct Rule of 78. Reidnet won his full settlement without taking them to court. I have sent my claim to the Financial Ombudsman - my circumstances are very similar to yours i.e 50K loan over 24 years, settled early and charged £50,600 approx.

Will let you know what happens. Inevitably it will take months for the case to be settled but I think it will be worth it.

Look at posts by Reidnet re this very issue.

Best of luck with everything

Rebel1

I am just getting ready to go through this with First Plus now. Any advice would be greatly appreciated.

I haven't taken this any further but would be interested to see how Rebel1 gets on.

30% !!!!! That is criminal. I hope there aren't too many people in that position.

Hello all

Have not visited for a bit, but thought I'd fill you in re FirstPlus.

Please, please, please note everyone that if your repayment figure has been calculated using the Rule of 78 (check the back of your agreeement) FirstPlus could be in big trouble. The use of the Rule was outlawed some time ago (I think a couple of years, google to find out). FirstPlus should not being using this formula as it is now illegal.

I decided to file my compolaint with the Ombudsman, over 6 months ago now. They have not thrown it out and are looking at the merits of my argument, namely that FirstPlus were fully aware that the Rule of 78 charges the borrower a disproportionate amount of interest and is therefore unfair under contract law.

Will keep everyone posted. Please wish me luck. And good luck to all you other 'rebels' out there.

Hello Steven

I will outline my case later this evening - kid commitments at the mo'. However I did find out the date on which the Rule of 78 was outlawed. Any contracts entered into after May 31st 2005 cannot use the Rule of 78 to calculate any redemption figure requested by the borrower.

I truly hope this makes it crystal clear to all borrowers who have used FirstPlus and are trying to pay off a loan early. The amount that you pay back should reflect the fact that you have been making payments towards the principal sum and not interest only, therfore you should not have to pay back more than you originally borrowed.

Hope this helps some people.

I was one year too early - I took out my 50k loan with them in April 2004. I knew I'd pay back some silly amount but after three years of repayments of £550 odd, I hadn't bargained on my redemption amount being higher than the original loan.

Hi James31(or anyone with advice)

I am very interested to see where you get with this, I am in almost an identical situation. Firstplus secured loan taken out in July 2004. The loan amount was £50k over 20yrs @ 8.9%. Over £104k to pay back. Asked for settlement quotation in Dec 2007 and was told......£50263.53 !!!! Have already paid back £21k. I have recently accepted an offer on my property, so will hopefully be moving soon. My position then will be that I should have approx £30k to £34k available. All I wish to do with this is to get rid of the above loan.

I am not sure what to do yet. Hope you keep updating.

Gatz

Originally Posted by Rebel1

James31

Reidnet and myself have both taken issue with extortionate interest charged by FirstPlus who have been calculating the interest on loans using the recently defunct Rule of 78. Reidnet won his full settlement without taking them to court. I have sent my claim to the Financial Ombudsman - my circumstances are very similar to yours i.e 50K loan over 24 years, settled early and charged £50,600 approx.

Will let you know what happens. Inevitably it will take months for the case to be settled but I think it will be worth it.

Look at posts by Reidnet re this very issue.

Best of luck with everything

Rebel1

If rule 78 was found to be unfair then surely it should mean that anyone having a loan settlement figure based on rule 78 have been treated unfairly and as such are entitled to compensation. If its unfair then its unfair????????

I have loan with firstplus, 20k in 2006 then advance totalling 34k,can i check that my agreement is enforceable,even though i am over the 25k limit before it can be deemed unenforceable? I had a company tell me that they cant pursue this as it is over 25k??

Gaz

Just coming back to this thread after 2 years and I see that settlements paid where rule 78 was used to calculate that settlement on unregulated loans (i.e. over 25k) is open to challenge.

Has anybody tried and succeeded in claiming back the interest portion of their settlement to firstplus for a loan over 25k?

If so, what is the correct/fair method for calculating the settlement figure?

To recap, I borrowed 50k in May 2004 and repaid 52k in March 2007.

Letter sent to FirstPlus. I outlined what I think the settlement figure ought to have been and have asked that they repay the difference, plus 8% interest.

Let's see what they say.

If we could have more info on thsi it woudl be appreciated as we took out a loan for 52k in 2004 and then sold the house in 2006 but ended up with a deficit of about £6000 after paying £550 for 18 months!