managed loan, hsbc, 66% interest

[needhelp66]

hi im wondering if any one can help me...

i have been a customer with hsbc bank for over 7 years and when i was 22 i took out a loan of £5000 with them based on paying them back £175 p/m for five years. in 2005 i went to university and they 'upgraded' my acct to a student acct with an over draft limit of £1,200. they also offered me a credit card with a limit of £750 which they then extended two months into the first year of my degree to £1500. by the beginning of my second term, living in brighton with high rent of £400 and living expenses, i was struggling to keep my head above water. by the summer i couldn't pay any of it off. no matter how hard i worked i couldn't stay on top of my repayments. i went to the bank asking for help and in july of this year they offered me a 'managed loan'. they covered all of my debt owing on my loan, credit card and overdraft which amounted to 9400 and asked me too make them an offer of what i could repay per month. i offered £150. they agreed to this and i set up the amount on direct debit and thought no more about it, other then the utter relief that they had been so helpful. after a few months i started to notice how little i seemed to be repaying on the balance. in 6 months it has reduced by £200. i went to get a print out of my last 6 statements and notice that every time my £150 was credited, hsbc debit £92.83 in interest. on a debt of £9400 i am paying what works out to be almost 66% interest. this can't be right, how will i ever pay this debt back when only £58 of my £150 is actually paying off the balance. i work 55 hours a week to keep my head above water and i seriously need some help with this as it just seems so wrong for a 23 year old to be repaying almost £30,000 for the rest of my life. i know it sounds dramatic but im scared i will never be free of this debt and that my bank have me exactly where they want me. making money from someone who just doesn't have it. any thoughts or comments regarding this are more then welcome. please help.

[Rooster-UK]

This is one of the peculiarities of loans and it works in the same way as a repayment mortgage.

 

At the beginning virtually all of your payment is interest. Very little is used to pay off the principal.

As the loan progresses, less of the payment is interest and more of the payment actually pays the loan.

As you get towards the end of the loan period, vey little is taken in interest, most of the payment now covers the loan.

 

So basically, at the start, the interest is high and the loan payment is low. As you progress the interest falls and the repayment rises.

 

Like a snowball effect.

 

 

Regards, Rooster.

[baronis2uk]

hi there i am exactly the same apart from i took out a manged loans as i was so dar over drawn when i was a student 5 years ago and had been given credit cards etc from my bank, im a single mum and was at university trying to better myself so i could get off the beneift system, anyway what happend was they gave me a 13000 managed loan, i was paying 220 a month and 170 was interst i eventually had to give up university as i could not make the loan payments and pay the charges i was still incurring on my account.....so i lost or raher failed my degree as i couldnt pay the childcare for my kids, i went onto benefits, and in 6 years i have struggled to pay a ,anaged loan and also almost 3300 in bankk charges on my current account. i have claimed the charges backand i am waitig to hear,i am also in the eary stages of claiming the credit card charges back but i really dont know if i can claim anything back from a managed loan....so we are in the same boat.....i hope somebody here knows the answer....please help us!!!

[don leocornay]

Hello Guys,

 

You both seem to be in a similar position to me. The interest is 66% that's going into Loan Shark territory (although I wouldn't put it past them). In my case, it's currently 9.5% above base so currently about 15%.

 

The only way you can get any kind of comeback on this is if you didn't sign for the loan. If you didn't sign, ask for a copy under the Consumer Credit Act 1974. They have 12 working days from the receipt of your request to come up with the documentation. If they don't then the account is in default and they can't take your money (although they will try to so keep a close eye out!)

 

They then have a further 30 days to come up with the goods before they've broken the law. Once you get to this point you have a great bargaining tool to claim back your interest (at least) and maybe your premiums as well.

 

Here's my story below.

 

http://www.consumeractiongroup.co.uk/forum/other-institutions/92344-don-leocornays-gonna-kick.html

[bb23]

read this

BBC NEWS | UK | Banks 'prey on customers in debt'

we should at the very least be allowed to ask for our interest rate to be reveiwed

i am at present setting up a dedicated website and forum where HSBC Managed Loan specific customers can tell their stories - i then wish to bring this to the attention of the media with the help of a few journalist friends to see if theres anything we can do about the extortion and exploitation!

[Gwarpt1]

I have been dealing with HSBC for months now trying to get a personal loan but all they offer is this Managed loan.

As far as I can see all it does is start the whole process again.

 

Last year I tried to get them to stop charges due to being on benefits and in financial difficulty but they disputed that the Social Admin law was appicable and turned me down.

.So having cancelled all my Direct debits etc and arranged to have benefits put into a post office account I am going to put the claim in for these charges.

I have read a Lot of the posts and got totally confused.

 

These are the areas I am confused about and hope someone can give me some "Simple " answers to these cos I am old, stupid and skint!!!

 

1 Can I claim the £25 charged when a Direct Debit is made and then reclaimed?

2 What is this thing about claiming back 'interest - that has me totally baffled...

 

When got this sorted I am going to read up on the credit card charges so will no doubt be asking for help with that - but thats for later.

 

All help gratefully received

 

Thanks

Gwarpt1

[bb23]

HSBC are screwing so many of us !

 

in answer to your questions, yes you can claim the £25 charge for a returned DD but i'm not sure, same as you about the claiming back interest

 

if i did that i'd have about 3k out of them but i dont know if it applies to managed loans because, in claiming back normal Bank charges its just the charges you can claim for (i got mine back but they never paid me all the interest as well) so even tho they take £80 a month off me for instance, its not charges, its just interest and i'm not sure if it makes a claim.

[freakyleaky]

You can only claim back any interest that is as a direct result of charges. You need to calculate what portion of the interest relates to charges in any particular month.