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Travelscribe v GE Money

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After a long slog I am almost back on the financial track. With credit rating that had improved just enough to get a sensible rate high street mortgage I am able to ditch my GE Money secured loan.

 

As you will all no doubt know, they want to charge me a an early redemption penalty of about £2k (exact amount is in the post apparantly with a breakdown.) As I am on the verge of victory against RBS (see me seperate thread - they just offered me a 75% settlement which I am about to decline) I am pretty well up on proceedure and will be sending the prelim letter in the next couple of days.

 

The statement arrived separetely this morning and I see a couple of late fee charges. As they come to only £80, I thought I would simply call them to see if they would refund them as the amount was not too huge. I am then told by a 'senior manager' that "we are not a bank, we are a finance house, so the OFT ruling does not apply to us and we can charge you anything that we put in to the contract you signed when you took out the loan" (which incidently was nt with GE Money, but 1st National as there is no way I would have gone with a company so nortoriously unethical as GE if I could have avoided it)

 

Now, I am 99% sure that that is b*ll*cks. But I do want to check. The fact that dozens of people on this forum are claiming and winning against GE Money seems to back this up. But does anyone have any thoughts and is there a seperate SAR letter template than the one you send to regular banks? They even confirmed to me that the fees were "Penalty Charges" (and therefore by definition, punative)

 

 

NEXT ISSUE.... INTEREST.....

please stay with me on this and if I have missed the point, not worked something out properly or am not making sense, then let me know.

 

The loan amount was for £37,500 taken out 2 and half years ago (the first 5 months required no payment) over 15 years. I have paid the best part of £8k off the loan and yet the amount showing as a balance is £36,782 (this does not include the £2k early redemption penalty which is on top of that amount) Now I appreciate that the compound interest on the outstanding amount is significant, but what does not make sense is that they show a variable rate of interest which has obviously risen in the last couple of years. Yet, my agreement was for a fixed amount and a fixed number of payments to repay the loan. So am I missing the point that they can't vary the amount of interest that they are now trying to charge me? Plus the fact that whatever way I try to work it, the payments of £8k made should have reduced the amount owed by more than just £718. It would appear - and do please correct me if I am wrong - that they have worked out the amount repayable at the begining of the agreement - which in this case was £64800, which is a interest profit amount of £27,300 or £1,820 a year. Over 2 years that is £3,640 of interest. Meaning that they have double the amount, but what I assume is front loading the way that the interest is charged. Is that also legal, or can I claim for this too?

It is just that I reclaimed a regular unsecured loan early a few years ago and the proportionate amount that I had paid off compare to this was vast. It worked out, if my memory serves me correctly, that the split in repayment and interest was about 50/50 so I had paid something like £2000 off the loan and the amount had reduced by about £1000. Make sense? So repaying £8k and only reducing by £700 seems wrong in every respect.

 

So the questions are:

1) Is there a specific letter template I can use to reclaim the ERC?

2) Is there a claim to be made regarding the amount of interest paid vs the amount of capital repaid? ie have GE Money acted unlawfully?

3) Is there a way of working out what the amount should actually be?

4) Am I talking/writting nonsense?

5) Anyone else fought this one?

 

 

Thanks for your help

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Hi Travelscribe,

 

If you read the mortgage FAQs you will find links to the template letters for reclaiming the ERC.

 

http://www.consumeractiongroup.co.uk/forum/mortgage-companies/52020-mortgages-faq.html

 

With regard to the interest, it is likely that the fact that the you didnot have to make payments for five months would have affected the way interest accrued as interest would have been added with nothing being paid off the principal sum and therefore when you started payments most of this will go to paying off the interest rather than reducing the debt. If its a sub prime lender the interest rate will be high in any event. Its worth looking into the fact that the agreement states fixed interest yet they have been applying variable interest as this would be a clear breach of contract.

 

Hope this helps

 

 

Zoot

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