Hello again If you have read this link: Punishment eases for early payers of debt - Loans & Credit, Money - The Independent you will see that as the loan was taken out after May 2005 then the Rule of 78 cannot be used. It seems that you haven't paid the early redemption amount back yet so you don't actually have a claim as yet. Are you in the process of requesting a settlement figure? I would get the settlement figure first. If it is higher than the original loan, they have probably used the rule of 78. In any case check your loan paperwork and see whether they say they will use the Rule of 78 for early settlement (it is usually in small print on the back). If it is apparent from the early redemption figure that they have provided that the Rule of 78 has been used then first write to the company and complain telling them that this method has been outlawed and that you would like a recalculation of the redemption figure based on a fairer method. You should give the company at least 4 weeks to try and sort things out for you. Give them an estimate of how much you think you should be paying back i.e full loan amount less repayments to date and plus any administration charge that they levy on early redemption. If the company cannot resolve things after several weeks then write to the Financial Ombudsman complaining that the use of the archaic Rule of 78 has been outlawed (May 2005) and that the figure should be calculated using more fairer methods. Do not work to Welcome's timetable; they will try to say that they need more time to sort things out but make sure you stick to your guns if you feel that they are just trying to string things along. The FO will talk to the company on your behalf and make a decision based on the information you have provided and what the FO can collect from Welcome. Go online and file your complaint to the FO, print it out and send copies of correspondence etc as I have advised above. Good luck!

Hello again SPECIAL Please take a look at this link, it looks like you have a good cause to object to the use of the Rule of 78 as it was outlawed in May 2005 and should not be applied to ANY loans after this date: Punishment eases for early payers of debt - Loans & Credit, Money - The Independent

Hello SPECIAL I am pleased to let you know that the Financial Ombudsman has ruled in my favour; FirstPlus should not have used the Rule of 78 to calculate my early redemption figure on a loan for 50K. I am waiting for the response from FirstPlus on this decision. I would have to do some quick research to find out whether it was legal to use the Rule of 78 on your 3.5K loan in 2006. Over what period were you signed up to pay the loan off? Be clear that the Rule of 78 has been abolished for all new loans since the ruling to abolish it so it depends on when you took the loan out as to whether Welcome Finance can still employ it. I'll get back with my opinion shortly. Best of luck

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.

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.

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

Try this http://www.consumeractiongroup.co.uk/forum/ppi/59087-rule-78-unfair-could.html?highlight=rule+of+78#post538566

http://www.consumeractiongroup.co.uk/forum/ppi/59087-rule-78-unfair-could.html?highlight=rule+of+78#post538566 This should take you to Reidnet and his post re tackling loan company under unfairness of Rule of 78

Hello SR I notice that you didn't follow through with your query on whether the Rule of 78 is unfair and therefore illegal. I have sent a letter to a former loan provider specifically about this issue. I have had a letter back saying they will look into it. Please note that Reidnet (a fellow forum member) has been sucessful in his claim under the illegality of using Rule of 78 to calculate interest. Hope to hear from you soon. Debbie

Hello I am very impressed with your claim details - are you a lawyer!? Can you tell me the process involved in trying to claim back some interest that you paid to FirstPlus under the unfair and archaic Rule 78? We all can't be legal geniuses like yourself you see. Looking forward to hearing from you. PS I like your groovy website.