massive interest %

[fergal71]

can anyone help

a friend of mine has recently (stupidly) taken out a loan at over 75%. he had a loan from same company at 50 % and after 1 year took out new loan to pay off old loan and get an extra £1500.... Firstly are companies allowed to refinace like this????

 

Both loans have PPI on charging interest on both ?

 

Any help would be greatful?

[bigkacker]

Hi,

 

Unfortunately companies are allowed to refinance like this and are perfectly within their rights to charge a 75% APR.

 

The most likely reason for the increased APR is due to the follwoing facts:

1. The cost of financial institutions borrowing money from one another on the wholesale market is more expensive due to the financial risk involved increasing to the institutions.
   
2. Your friend may also be deemed as a higher risk due to his circumstances and because their is a much higher risk now than there was a year ago due to the downturn in the economy.
   

Because of websites like this making people aware of their rights, it is also very unlikely that the credit agreement will be unenforceable as most lenders have tightened up their criteria.

 

If your friend is still within the 30 day cancellation period he may be able to cancell the loan and pay back the proceeds but may be liable to any arrangement fees etc...

[fergal71]

I am sure I have read somewhere on here that they should not refinance their own loans.... and that High apr% can be subject to unfair contracts and terms

[fergal71]

bumping for any advice