Excessive Loan payments - central trust and lending

[rick355]

Hi All

 

I am sorry if something like this has been posted previously

but this site has become so big it is impossible to search it all.

If there is an existing post that may help me and some one can point me in the right direction i would be grateful.

 

my situation relates to a secured loan for £25,500

 

i took out with Central Trust (Central Lending Servicing) back in November2004. it was for debt consolidation but in hindsight was the worse possible thing i could of done.

 

it was a joint application between myself and my parents and was secured on their house.

 

I initially wanted around £22k but Central Trust said they could only offer £25,500,

i am assuming this is so they could get away with knowing it was unregulated.

 

Since my first payment in January 2005 i have paid a total of £27,592.27 off my loan. though my current balance still stands at £25,866.71.

This is £111.71 higher that the original amount of £25,755 (£25,500 + £255 legal fee).

 

My original agreement was for a payment of £250.79 for 288 months at a APR of 11.5% (variable).

I am now paying £289.84 a month as they have increase my payments 3 times.

i do not understand how they can get away with increasing the interest when interest rates have gone down!!!

 

i have been paying the loan for 7 years and it has not gone down and seeing as they add the interest monthly i cannot see how this will change.

A recent settlement figure explained that i still have £72k left to pay.

This would mean paying almost £100,000 for a £25,500 loan.

 

It seems rather excessive.!

 

I have had charges added on to the loan for late payment (payments were never more than 30 days late)

there have been 12 of these payments at £50 and £60.

Since these total to £680 and will have interest for the full period of the loan then they will be rather excessive.

 

i am not trying to get out of paying what i borrowed or anything but i do know what to do about it

realising how much i will have to pay for this loan (and the possibility of it still increasing) is really causing me a great deal of stress.

my original agreement was very basic and stated my payment amount and time scale so i knew what i was doing

but after seeing that i have paid £27k and my balance has actually gone up it is rather concerning.

 

i have sent a SAR and received all information.

i have also contacted the Financial ombudsman

but they cannot help.

 

Is there anything that can be done?

 

Many thanks for reading

[42man]

Was there any PPI on the loan by chance ? Did you get this originally via a broker ? Does it say variable in the agreement ?

[rick355]

Hi 42man

 

There was no PPI, I don't think a broker was used at all (there is no broker fee on the agreement) and yes it does say variable on the agreement.

 

Thanks

[42man]

It is quite staggering.....over what term was the loan to be repaid ? Even if they had increased the payment amounts it should still be on target to be repaid unless you have been in a serious amount of arrears (which it seems you haven't)....have you tried writing to them outlining your complaint ? and to give you a complete breakdown of how they arrive at their figures....it would be interesting to see the agreement too if you say it was 'basic' was it taken out in the home or online ?

[dx100uk]

can you post up the agreement please...

 

scan the required letters/agreements/sheets

as a picture file

remove all pers info inc barcodes etc using paint

but leave all figures and dates.

goto one of the many free online pdf converter websites

convert the image to pdf format.

or ir you have PDF as an installed printer drive use that

open a new msg box here

hit go advanced below the msg box

hit manage attachments below that box

hit the add files button on the top right

hit select files, navigate to your file on your pc

hit upload files

NB:you can set where it goes in the post by hitting insert inline.

the hit reply button

dx

[rick355]

The loan was originally over 288 months. I have just written them a letter asking for an explanation as when i asked on the phone the response was "that's just what it is".

 

I have a break down of the account month by month but it still doesn't make sense to me. i think its the charges that cause the problem (or a small part of it). it only seems that about £10/£20 is paid off each month by the time the interest goes on and with a £60 charge thats 3/4 months out the window in one go. it seems to act more like a credit card than a loan.

 

A copy of the agreement can be found below.

 

 

 

Thanks

[dx100uk]

cant read postage stamp

 

please follow the guide in my last post

 

it would be useful to see everything you have esp these statements.

 

make a multipage PDF and post that up

dx

[rick355]

The only other information i have relating to the application is a Legal charge sheet and Home owners application form.

 

I do not have a copy of the terms mentioned on the agreement as they never sent them through with my SAR. I have since requested them.

 

Also as the image is small above i have also uploaded a PDF below. Thanks

 

Central Trust Agrrement.pdf

[citizenB]

This looks to me to be more a variable mortgage type loan than a regular loan. However, it looks as though the interest rates have only ever gone UP unlike a proper mortgage/2nd mortgage where they would have gone up and down !! It appears to have been taken out over 24 years.. gulp !!

 

I think with this type of loan, it is only the interest that is paid in the early part of the contract, with the capital being repaid later. How exactly was this loan explained to you ?

 

I think we need to see the terms and conditions that came with the original loan paperwork.

[rick355]

Hi

 

Yeah you are right the interest has only ever gone up. I find it difficult to get a response from the company that actually explains anything. I have requested the original T&C's and will post them up as soon as they arrive.

 

It is my understanding that the interest is calculated each month for the life of the loan (it mentions on the agreement that interest is calculated at 0.900% monthly). Admittedly i was a little naive when i took the loan out however it was hardly explained to me at all. The application was done on-line and the paperwork sent to sign and send back. Very little contact was had from anyone at Central Trust.

 

Please see below the main docs i have plus statments

 

Central Trust Docs & Statements.pdf

 

 

Many Thanks

[dx100uk]

The only other information i have relating to the application is a Legal charge sheet and Home owners application form.

 

I do not have a copy of the terms mentioned on the agreement as they never sent them through with my SAR. I have since requested them.

 

Also as the image is small above i have also uploaded a PDF below. Thanks

 

[ATTACH=CONFIG]29972[/ATTACH]

 

 

i have unapproved the FIRST pdf

you need to use the PAINT prog to blank out

as you info shows if layers are removed.

 

do the blanking as a JPG THEN convert to PDF.

 

THE SECOND PDF IS OK so no work needed

 

i'll get help for you

 

dx

[rick355]

Thanks dx i appreciate to assistance.

[ims21]

Hi

 

Looking in as asked By citizenB.

 

The original loan was for £25,755 with repayments initially of £250.79 per month. The loan to be repaid over 24 years or 288 months.

 

So let us just assume for the moment that it was fixed rate and not variable. That would mean that had the loan run naturally, you would make 288 payments of £250.79 = £72,227.57 and the loan would have been cleared in 24 years. The total interest would therefore have been £46,472.57.

 

With any loan like this, the interest charged to the account is worked out on the outstanding balance and applied to the account. This means that in the earlier years the interest amount is higher since the balance on the account is higher. So in the earlier years a greater part of your monthly payment is going towards interest than it is capital. In the later years, the capital balance is lower and so the interest amount is a lower proportion of the monthly payment.

 

When you miss payments, the bank still calculate the monthly interest and add it to the account balance but there is no repayment in that month to compensate. When the next months interest calculation come round, they calculate the interest on the account balance which now includes the unpaid interest from the previous missed payment.

 

With a loan of this term, this can have a significant impact.

 

If they also add charges (in your case they call them collection costs and such) and interest is calculated on these as well.

 

Periodically the bank should adjust the direct debit amount i.e. increase it so that you pay off these arrears and extra charges over the lifetime of the loan. The agreement says it is a 288 month agreement and they cannot let it go beyond that timescale so the only way to ensure that the loan is paid off (including the interest) is to increase the instalment amount or for you to make a lump sum payment into the account.

 

As you have the statements showing these charges I think you ought to reclaim the charges applied because as with other loans and credit cards they are deemed unlawful.

 

You still have 17 years left on this loan and if you can get it back on an even footing then you will find that in the later years you will be paying off more capital and less interest.

 

Regards

 

ims

[dx100uk]

:shock:

[ims21]

Hi

 

This might help you to follow what I was on about. It is a loan progression calculator. Enter the loan amount, the number of payments and the monthly repayment in the three boxes at top and it will show you how your loan would progress had it run naturally.

 

You will see that your month 1 payment only paid off about £19 in capital, the rest went to interest. If you look at the end of the loan you will see that the capital is the greater part of the payment and interest is very small.

 

Hope this helps

 

Regards

 

ims

 

LoanAnalysis.xls

[citizenB]

Thanks ims21:thumb:

[elsinore]

THE SECOND PDF IS OK so no work needed

 

The Homeowners Application Form clearly states the borrowers' names.

 

Els

[rick355]

Hi ims21

 

Thank you for your response. As you can imagine my concern is that after paying for this long it hasn't even gone down by a little bit.I just find it hard to get my head around the fact that it will ever change.

 

I have re-chased the terms & conditions and should have them next week.

 

With regards to reclaiming the charges should I just use the standard Credit Card reclaim letter template or is there a better one i can use? Also what should i use to work out the interest that has been paid on them

 

Elsinore - Thanks for pointing that out I must of missed that one.

 

 

Thanks for all the help everyone. It is much appreciated.

[citizenB]

I think you can use the spreadsheet below. You enter the interest rate at which they are charging you in the section at the top of the spreadsheet and all the calculations are done for you.

 

HTH

 

[ATTACH]30006[/ATTACH]

[ims21]

Hi

 

The spreadie that citizenB has given you will do your calcs for you.

 

As regards the letter, base it on the card charges template but the thing to do is re-write it in your own words to fit your own case. The banks have seen virtually every template under the sun and a personal letter is always best.

 

Regards

 

ims

[rick355]

Thanks for the help Guys.

 

I have finally received a copy of the terms and conditions of the loan and have attached them below.

 

Central Trust Loan T&C's.pdf

 

Thanks

[citizenB]

You can see they have identified the way in which they use the monies you pay each month to reduce the debt owed.. With capital repayment being last.

 

I think you could probably still reclaim any charges made if they are not representative of their costs though

[rick355]

Hi.

 

i wrote to them to highlight the charges issue ad claim back over £1000 in charges. I received a letter a few days ago from them saying the usual rubbish plus:

 

"We can confirm that we will be conducting a thorough investigation into your concerns raised. once we have completed this, we will write to you again."

 

They also attached details for the internal complaints procedure and said they anticipated that the reply would be no longer than 8 weeks.

 

My question is should I write back and give them a timeline to stick to or await their response. My assumption is that they will hope i just give up and forget about it.

 

Thanks

[42man]

Unfortunately you should give them 8 weeks to answer your complaints/queries...

[dx100uk]

then off to the FOS..

if you wish to prod them.

 

write back

thanking the leter

 

and assuring them that if by XX date you have heard nothing positive toward the refund of £XXX vcharges in full

you will be opening a complaint with the FOS without further comminication

 

this will cost them +£450 regardless to the outcome.

 

dx