Managed loan

[MayRich]

Hi everyone,

 

I've been offered a managed loan by HSBC. I know these are notoriously dodgy. However, this is at 0.00% over base rate. I originally wanted to remortgage to roll about 50K of debt into my mortgage, which would have been perfectly affordable, but got caught out by the credit crunch and couldn't remortgage. I can afford to repay the money over the long term, just can't cope with high short term interest rates. So honestly speaking this looks like a reasonable offer. Also I have a serious battle going on with MBNA, who are utter ****ers, so I'd quite like to come to terms with my other creditors so, if worst comes to worst, I can point out to a judge that MBNA are the only ones who have been unreasonable.

 

But you guys are the experts. Can anyone tell me good reasons not to sign this managed loan agreement? Are they offering it to me because it erodes my rights in some way? Does it make it easier for them to turn it into a charging order at a later date. Are they going to wait six months and hike rates? If BOE rates rise next year to 10% and I can't afford the repayments will I regret signing this.

 

Any comments welcomed.

[lateralus]

i think the clue is in the title - managed loans - managed by whom - not you, the customer - managed by the greedy sods at hsbc.

 

these are normally offered to the most vulnerable customers who are having trouble keeping out of the red - mainly because of the many and varied charges on their accounts.

 

look at this thread Who has had Managed Loans?

it is just a portion of the people who have been suckered into them - with the managed loan being portrayed by the back as the holy grail, the answer to your financial woes. my guess is about 98% of the people who have them wish to god they had never heard of hsbc.

the fine print is the problem - they have total control and you step out of line - they have the power to club you for it.

as well as the above post - just put managed loan into the search box on the blue strip at the top of this page - you can read for days and not read all the threads with people unhappy who signed on the dotted line of the managed loan.

i wouldn't touch a managed loan for anything. well, you did say any comments welcomed. find another way would be my comment.

[MayRich]

i think the clue is in the title - managed loans - managed by whom - not you, the customer - managed by the greedy sods at hsbc.

 

these are normally offered to the most vulnerable customers who are having trouble keeping out of the red - mainly because of the many and varied charges on their accounts.

 

look at this thread Who has had Managed Loans?

it is just a portion of the people who have been suckered into them - with the managed loan being portrayed by the back as the holy grail, the answer to your financial woes. my guess is about 98% of the people who have them wish to god they had never heard of hsbc.

the fine print is the problem - they have total control and you step out of line - they have the power to club you for it.

as well as the above post - just put managed loan into the search box on the blue strip at the top of this page - you can read for days and not read all the threads with people unhappy who signed on the dotted line of the managed loan.

i wouldn't touch a managed loan for anything. well, you did say any comments welcomed. find another way would be my comment.

 

Thanks, negative comments are fine too. Basically I am trying to make my mind up so I need to hear the bad stuff.

 

I understand all you say, though I'm not sure I see what the difference is between this and any other form of unsecured lending. Essentially the agreement is a credit agreement, not significantly different to the ones I already have with them. "Managed" doesn't seem to have any legal significance, or am I wrong about that?

 

The variable rate is a concern, as I see rates rising in future. Though if this loan becomes unaffordable, we'd basically just be back to square one, with me having to pay them whatever I can afford on a monthly basis (this is what I am doing now, but they are charging pretty steep interest on two accounts).

 

I'm genuinely not sure. I'ev previously refused several attempts to steer me towards a managed loan at silly rates, but this time it is 0% (and 0% over base rate).

[MayRich]

Might also be worth mentioning that I've previously won a claim for excess charges, that I've long since started banking in a parachute account and that I've given up on worriyng about my credit rating for the time being since I already have defaults against me. So at least some of the obvious negative consequences of accepting managed loans don't really apply to me. It won't include any previous excess charges, I don't care if they withdraw overdraft facilities etc as I don't want to bank from them and my credit rating is already shot for the forseeable future. I just want the simplest way to make payments to them without them going on bothering me all the time.

 

Maybe I'm being naive though.

 

Edit: One more thought - maybe I should ask them to provide my original credit agreements so that I can "compare the terms" - it did cross my mind that they may not have them in which case they would be getting a new signed agreement from me this way. Hmmm...

[Castlebest]

Hiya May don't touch a managed loan with a barge pole!!!!

 

The Idea behind managed loans is sound enough but in fact they are little more then financial slavery.

 

The theory as I understand it is Managed Loans are supposed to be a temporary measure to get you over a cash flow problem. The bank loans you some capital at a rather high rate of interest and it gets reviewed regularly (managed) to make sure this is still the best option for you.

 

The problem arises because they are never reviewed and the way the interest structure is set up your not really paying off much if any of the amount you borrowed so you will end up paying back many times more than you borrowed over a much longer period than you anticipated.

 

Good points - None, there are Loan Sharks out there that will do you a cheaper loan.

 

pete

[MayRich]

Hiya May don't touch a managed loan with a barge pole!!!!

 

The Idea behind managed loans is sound enough but in fact they are little more then financial slavery.

 

The theory as I understand it is Managed Loans are supposed to be a temporary measure to get you over a cash flow problem. The bank loans you some capital at a rather high rate of interest and it gets reviewed regularly (managed) to make sure this is still the best option for you.

 

The problem arises because they are never reviewed and the way the interest structure is set up your not really paying off much if any of the amount you borrowed so you will end up paying back many times more than you borrowed over a much longer period than you anticipated.

 

Good points - None, there are Loan Sharks out there that will do you a cheaper loan.

 

pete

 

Thanks - that's always been my understanding, and has certainly been what they previously offered me. But in this case the loan agreement is for 0.00% over base rate which makes it at least worth putting some serious thought to.

 

On the other hand, why can't they just do this as an arrangement like my other creditors? So I also have to be a bit suspicious. I half think they might not have credit agreements for the previous debts.

 

I think I will probably hang on to the agreement for now, not sign anything, and write to them saying I am considering the offer but ask them to elucidate the difference between a managed and personal loan and also ask for my previous credit agreements for the sake of comparison. Will be interesting to see what that elicits.

[Castlebest]

That sounds like a good plan May, and I will be interested to see what the Bank say to your request for your old loan agreements.

 

pete

[DHO_2009]

MayRich...I am having some issues with HSBC (see http://www.consumeractiongroup.co.uk/forum/hsbc-bank/193587-saga-hsbc-me-help.html) and particually my last post about them offering me the managed loan. In essence, in their letter, which I presume is the case for you too, they offered a 1.50% rate but in the VERY LONG small print on the actual agreement, the rate is actually 7.80%. Have a look...

Oh, and they offered me £1530 where as my O/D is £1430 so make sure they have not hoodwinked you with a bigger sum...and when I pay it off in 2016 (!) I will have repaid nearly £2000. Note they say 'thier' base rate - but bear in mind that the Bank of England rate is 0.50%...

 

You do the math and see what it is REALLY about. I would urge you not to take it, and if you do need a loan, see what other institutions are offering. Or go with a loan that HSBC offer that isnt a managed one...

[MayRich]

MayRich...I am having some issues with HSBC (see http://www.consumeractiongroup.co.uk/forum/hsbc-bank/193587-saga-hsbc-me-help.html) and particually my last post about them offering me the managed loan. In essence, in their letter, which I presume is the case for you too, they offered a 1.50% rate but in the VERY LONG small print on the actual agreement, the rate is actually 7.80%. Have a look...

Oh, and they offered me £1530 where as my O/D is £1430 so make sure they have not hoodwinked you with a bigger sum...and when I pay it off in 2016 (!) I will have repaid nearly £2000. Note they say 'thier' base rate - but bear in mind that the Bank of England rate is 0.50%...

 

You do the math and see what it is REALLY about. I would urge you not to take it, and if you do need a loan, see what other institutions are offering. Or go with a loan that HSBC offer that isnt a managed one...

 

Hi DHO,

 

Thanks. I know that's one of their strategies so I already checked for it. I've scoured the small print several times and there is no reference to a higher rate hidden in there. The accompanying letter implies the 0% is a concession, however the loan agreement specifically refers to 0% over base rate with no get-out clause. It is variable in accordance with "their" base rate as you say - but this has to be advertised so there is some level of accountability there, can't just randomly put mine up (as happened to me with a couple of credit cards which ended up at 29.9 and 34.9%...). My original aim with this debt was to roll it into the mortgage, which would have involved paying it off with interest over a long period - I just got caught out by the credit crunch and the rapid disappearance of mortgages. (Actually had a good offer for remortgaging all my debt withdrawn without explanation after a three month delay in ratification...)

 

My biggest concern is that the accompanying letter asks me to confirm I have previously seen terms and conditions etc, so between that and signing a new loan, I could be acknowledging a debt that they may be unable to enforce. I don't particularly want to wriggle out of debts but after the way the banks have been messing me about I'd not want to give them an inch I don't have to.

 

As to the last bit, my credit rating is shot for now. So my only options are to keep this debt with HSBC - meaning I either battle on to try to get them to stick to an arrangement (painful as they keep setting short limits then unfreezing the interest) or go with this loan. I could possibly roll some of it into a secured loan though last time I checked even that wasn't possible and that would actually be a retrograde step as it would be my home in more danger than it is currently in.

 

I appreciate the feedback from everyone, still thinking hard about this and it really helps that this forum is here. It's already been a huge help to me in dealing with other issues.

[MayRich]

You do the math and see what it is REALLY about. I would urge you not to take it, and if you do need a loan, see what other institutions are offering. Or go with a loan that HSBC offer that isnt a managed one...

 

Oh, and the sum they are offering the loan for is the correct amount. I have previously had fees refunded so while some of it is made up of interest that I regard as somewhat outrageous, there isn't really any scope for challenging the amount. Unless they don't have the original credit agreements of course, in which case life gets a bit more interesting. They're all very old accounts.

[303]

Hi MayRich,

 

It sounds like you're in a very similar position to my wife and I. We wrote offers of pro-rata payments to our creditors a few weeks ago (HSBC own well over 90% of our debts), and didn't really expect to hear anything back from HSBC, and we were just starting to look at other options (particularly an IVA). But we received a letter from HSBC a few days ago, agreeing to our offer of payment provided we consolidate our borrowing into a Managed Loan, and as a concession to us, this would be at an APR of 0% above base rate. Again, like you, the repayment schedule in the agreement, with no interest or charges applied, adds up to the full amount of the loan.

 

I've been looking around for anyone who has been offered a similar proposal, and despite coming across many, many stories of people on Managed Loans with extortionate interest rates, you're the first person I've come across that seems to be looking at the same deal that we are. I posted on the forum over at moneysavingexpert.com and most of the replies were along the lines of "don't touch it with a barge pole", but these responses seem to be coming from people with little-to-no first hand experience of the kind of agreement we've been offered. Somebody who claims to work for HSBC has said that the only catch is that HSBC reserve the right to vary interest rates in the future. Realistically though, in our current situation, I think that's a chance we're going to have to take - even a restructured loan at 7-10% above base rate would still probably be competitive against the kind of standard loan rates we're currently looking at, given the state our credit record's in.

 

I'd appreciate it if you could keep me posted on what you decide, and what happens, and I'll do the same if you like

[MayRich]

Hi MayRich,

 

It sounds like you're in a very similar position to my wife and I. We wrote offers of pro-rata payments to our creditors a few weeks ago (HSBC own well over 90% of our debts), and didn't really expect to hear anything back from HSBC, and we were just starting to look at other options (particularly an IVA). But we received a letter from HSBC a few days ago, agreeing to our offer of payment provided we consolidate our borrowing into a Managed Loan, and as a concession to us, this would be at an APR of 0% above base rate. Again, like you, the repayment schedule in the agreement, with no interest or charges applied, adds up to the full amount of the loan.

 

I've been looking around for anyone who has been offered a similar proposal, and despite coming across many, many stories of people on Managed Loans with extortionate interest rates, you're the first person I've come across that seems to be looking at the same deal that we are. I posted on the forum over at moneysavingexpert.com and most of the replies were along the lines of "don't touch it with a barge pole", but these responses seem to be coming from people with little-to-no first hand experience of the kind of agreement we've been offered. Somebody who claims to work for HSBC has said that the only catch is that HSBC reserve the right to vary interest rates in the future. Realistically though, in our current situation, I think that's a chance we're going to have to take - even a restructured loan at 7-10% above base rate would still probably be competitive against the kind of standard loan rates we're currently looking at, given the state our credit record's in.

 

I'd appreciate it if you could keep me posted on what you decide, and what happens, and I'll do the same if you like

 

Hi 303,

 

That's interesting - my agreement does allow them to vary the agreement but the rate is defined as 0% over "our base rate" and they give details of how they will publish changes in their base rate, so I can't see how they could do it in an arbitrary way.

 

I have a gut feeling that they can't find one or more of my original agreements. They responded for my request for the original agreements with a pathetic letter from the marketing department accompanied by a leaflet which explains nothing. So maybe 1) they think getting something from me is better than the risk of losing one of the debts completely and 2) they are starting to take a cold look at their bad debts and deciding that any cashflow is better than bankrupting people.

 

On the other hand, I don't have any great desire to deny or dispute the debts - I just want to find a way to pay it back over a long period, and this seems to give me a way to do that. And if, in future I get into trouble and can't keep up the payments, I don't see that signing this agreement has given them any additional ammunition.

 

It's a tricky one, but I'm still leaning towards signing it, especially as it does seem like this isn't their standard draconian terms.

 

Let me know what you decide. And do make sure you read the agreement in great detail to see if you can spot some clause that allows them to vary the rate at will or increase the monthly payments later on. I think this might be a rare case of a lender behaving reasonably though.

 

(Also bear in mind that taking on the managed loan may have negative effects on your credit rating, if not as bad as an IVA - I don't really know about that sttuf).

[Castlebest]

I have now seen 4 of you with these offers so I think HSBC may be seeing reason regarding people in your position.

If they default you and sell the debt to a DCA they will probably looking at about 20 to 30% of the total value you owe them, at least this way they should get all their money back... just not immediately

All I would say is read and understand every word in the agreement they have sent you... they can be very very slippery

 

pete

[johnnymitch]

All I would say is read and understand every word in the agreement they have sent you... they can be very very slippery

 

I would agree with pete on this one MayRich - read the small print with a magnifying glass ........ or even a microscope .......LOL!

 

Personally , I think I'm with with the 'wouldn't touch it with a barge pole ' lobby (pete in #5)...... but they may be softening to attract custom ......

 

Having weighed all the pros and cons it has to be your call - just be very wary ......

[303]

Well seeing the following sentence on the loan agreement...

 

"Any of our terms and conditions may be varied by us from time to time"

...makes me wonder if any worrying over the small print is academic anyway! Although having Googled that sentence, it seems to be a fairly standard clause - just never noticed it before (probably because I've never inspected any credit agreement quite so closely before).

 

I spoke to a lady at the CCCS last night, and although what she advised was essentially common sense (check the agreement thoroughly etc), she didn't say there was any reason to take the offer at anything other than face value - ie. although the interest could increase in the future, for the time being, the loan would be fee and interest free. And I don't know about MayRich, but given that we were psychologically preparing ourselves for the possiblity of me going bankrupt, I think we're going to take the chance and sign the thing.

[johnnymitch]

"Any of our terms and conditions may be varied by us from time to time"

 

That's the one they'll hang you with - if it's in there they'll use it - suck you in with an offer you can't refuse and then - Bang!

 

When you complain , they'll trot it out - "our terms and conditions , which you signed up to , state ...... "

 

If you have time have a read of some of the horror stories on here (best to start from the latest and work back) .......

 

http://www.consumeractiongroup.co.uk/forum/hsbc-bank/15457-who-has-had-managed.html?highlight=who+has+managed+loans[/font]

 

 

However , as I said to MayRich , 303 - it has to be your call .........

[johnnymitch]

As an afterthought , this one from Lateralus , a very wise lady, may be easier to read ..........

 

http://www.consumeractiongroup.co.uk/forum/hsbc-bank/162162-advice-managed-loan-please.html

[303]

That's the one they'll hang you with - if it's in there they'll use it - suck you in with an offer you can't refuse and then - Bang!

 

Think I'll check the agreement for our original loan, which thankfully I still have, to see if it's a standard thing.

 

I'd really been hoping I would get a definitive answer from the CCCS on whether I should accept the offer or not, but to be honest the girl I spoke to wasn't a lot of use; considering their staff are supposed to be trained debt counsellors, all she could really offer was common sense stuff as I mentioned earlier.

 

The main gripe people seem to have with HSBC's Managed Loans is that once you sign up, at a ridiculously high APR, the loan never gets reviewed and so you're stuck with the same crappy terms for the life of the loan. But to be honest, given that we're being offered an arrangement at 0%, I'd say if the agreement was never reviewed, that would work in our favour. But I would imagine they will be keener to review the terms if they're not making any more money out of us.....really, we could go round in circles forever trying to decide whether to sign this thing; I think the wife and I will probably be looking to make a definite decision within the next couple of days - I'll let you know what we decide...

[johnnymitch]

I think you're wise to take your time over this 303 -

 

btw - it's not 0% - only 0% 'above their base rate'........... which can change willy nilly and quickly .........

 

I'll be interested to hear your decision though - thanks for offering to keep us informed ....

[303]

OK, well we decided to bite the bullet and sign the thing. It's now been set up, and now when I log on to Internet Banking I can see that the 2 credit cards, personal loan and overdraft have all been paid in full and closed, and the balance showing for the new 'Managed Loan' account is the exact figure quoted on the initial letter. What this means, in the short term at least, is that when pay day comes at the end of this week, we'll actually be in credit on our current account - can't even remember the last time that happened!!

[lateralus]

as a mother.... sometimes i just can't help myself.

try, very, very hard not to use the overdraft which they will offer/attach/add on or will invaliably become available to you. my feeling is that if we lived within our means (i.e. if you have £300 in the bank - don't spend more than £300 until more money comes in) we'd all be better off. obviously just my personal viewpoint but think back as to how it all got out of control - and most likely the overdraft will have been the start.

a new start - good luck and keep in credit! (sermon over!)

[303]

as a mother.... sometimes i just can't help myself.

try, very, very hard not to use the overdraft which they will offer/attach/add on or will invaliably become available to you. my feeling is that if we lived within our means (i.e. if you have £300 in the bank - don't spend more than £300 until more money comes in) we'd all be better off. obviously just my personal viewpoint but think back as to how it all got out of control - and most likely the overdraft will have been the start.

a new start - good luck and keep in credit! (sermon over!)

I absolutely agree with you. A big part of the reason we're in the situation we're in is that we had thousands of pounds worth of credit available to us, particularly on credit cards, so if we wanted something, rather than just wait, we bought it. I'm not talking about anything big like cars or holidays - in fact that might have been our downfall, as personally speaking, I think the fact that I only ever spent small amounts at any one time (new DVD here, another computer game there) helped me convince myself it was OK. It was the fact that I kept on doing that over a sustained period of time that was the killer. Anyway, better not get carried away....thanks for the advice, and rest assured we won't be seeking credit of any kind whatsoever in the near future