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Please Help! Unfair Credit Agreement?


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Some advice would be much appreciated :)

 

Stupidly I took out a £400 loan with a cheque cashing company.

I was paying £80 interest per month as an extension fee, or my cheques went to the bank.

 

I could not keep on paying £80 per month and not reducing the debt so I cancelled my cheque book with the bank and phoned the creditor to say I could afford to pay £40 per month.

 

I also informed them I was in financial difficulties. Their response was to add £100 onto the amount outstanding, meaning I am now repaying £500.

 

Please can someone tell me if any of the terms in the credit agreement could be deemed unfair, and what action I can take, or what agencies could take action for me.

(The text of the credit agreement below...)

 

CREDIT AGREEMENT REGULATED BY THE CONSUMER CREDIT ACT 1974

Agreement No ******

Creditor: ****************************************

Tel: **** *** ***

 

IMPORTANT YOU SHOULD READ THIS CAREFULLY YOUR RIGHTS

The Consumer Credit Act 1974 covers this Agreement and lays down certain requirements for your protection

which must be satisfied when the Agreement is made. If they are not, the creditor cannot enforce this agreement

against you without a court order.

The Act also gives you a number of rights. You have the right to settle this Agreement at any time by giving

notice in writing and paying off all amounts payable under this Agreement.

If you would like to know more about the protection and remedies provided under the Act, you should contact

either your local Trading Standards Department or your nearest Citizens’ Advice Bureau.

 

FINANCIAL INFORMATION

THE CREDIT LIMIT OF £100.00 may be varied to such sum as may be determined by the

Creditor and notice of it will be given to the customer.

INTEREST will be charged at a rate of %on the credit provided, calculated at 20.00%of

the face value of the cheque payable in advance. The Interest Rate may be varied when any change is

made to the Bank Rate and notice will be given to the customer in writing.

REPAYMENT is by presentation of each cheque 30 days from the date of the cheque

AMOUNT OF EACH REPAYMENT is equal to the value of each cheque

THE APR in respect of this service is 1413.1

Signature for (or on behalf of) Creditor

Date

XXXXX

18/05/05

You may during the currency of the agreement:

· receive advances on your cheques providing the total value not yet repaid is less than the Credit Limit.

· within the terms set out in the Financial Information, select a different date for presentation of a cheque.

You agree

· that signature to this agreement acknowledges receipt of a true copy of the agreement

· if your cheque is not honoured we may share information about you and your account with other

lenders

· to a creditor making a credit reference and fraud prevention Agency search which may be recorded

by the Agency concerned and shared with other creditors

and

· the creditor may disclose to such agencies how you conduct your account

· if you default or are suspected of fraud that other lenders may use this information

about you and others with whom you are financially linked for credit assessment,

debt tracing, and fraud and money laundering prevention.

You have a right to be told which Agency we use to obtain from the Agency a copy of your file.

You must tell us within 14 days if you change your name or address.

 

We will require you to pay all our expenses and legal costs as follows:

· if a direct debit or cheque is not honoured

· the amount of any other losses or reasonable costs we incur (but are not limited to) for tracing you,

notifying you of the breach, communicating with you about the breach and enforcing payment due

under this Agreement.

We may

· end this agreement after giving you proper notice in writing if:

o You fail materially to fulfil your obligations set out in any part of the agreement

o You have given false information in connection with this agreement

o You commit an act of bankruptcy (such as failing to pay a debt as ordered by a Court)

· allow another person to take over our part of the agreement, that person will then take over

all rights and responsibilities under the agreement

· charge default interest on arrears as long as they are in arrears at the rate set out above.

 

By signing this agreement you agree:

· That the details you have given are true and complete;

· To pay the Creditor the instalment as set out in the Financial Information;

· To the Terms and Conditions below.

We may use the details we have about you to provide you with information about other products or services

offered by us or other persons. If you do not wish to receive this information please write to us at the above

address or tick this box.

This is a credit agreement regulated by the Consumer Credit Act 1974.

Sign it only if you want to be legally bound by its terms.

Signature of Customer

Date of Signature

Creditors copy (copy must be given to Customer) 73.1v3 Debtor Creditor Unrestricted Use Executed Running Account Non Cancellable (Adv) © CCAUK 2001. This agreement may not be copied or reproduced.

THE CONSUMER CREDIT ASSOCIATION Promotes high standards of business and consumer relations in the home credit industry. The Association has over 800 full and associate members who range from large public limited

companies to small firms providing cash loans or the sale of consumer goods or gift vouchers on credit and cheque encashment. The Association has a Code of Practice to which their members must subscribe. If you would like

a copy of the Code of Practice or information about your rights as a consumer in relation to this agreement, contact: The Consumer Credit Association, Queens Road, Chester CH13BQ. Tel 01244 312 044 Fax 01244 318035

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THE APR in respect of this service is 1413.1

--------------------------------------------------

 

YIKES!!!

If my post was helpful don't forget to click the star!

Advice is offered freely, without liability and without prejudice.

If in any doubt professional legal advice should be sought.

 

I do not profess to be in any way legally trained, I am a big

oily truck driver and all I know has been learned within the

Consumer Action Group.

 

FAQ's

http://www.consumeractiongroup.co.uk/forum/faqs-please-read-these/

 

Trying to stop smoking?

http://www.consumeractiongroup.co.uk/forum/give-up-smoking-here/

 

A dummies guide to the forums

http://www.consumeractiongroup.co.uk/forum/welcome-consumer-forums/107001-how-do-i-dummies.html

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THE APR in respect of this service is 1413.1

--------------------------------------------------

 

YIKES!!!

 

THis is the reason why the CC Act was bought in in thefirst place wasn't it?

Just hate every DCA out there

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Matthew, no wonder you got into difficulties paying that sort of interest.

I guess your credit rating must have been pretty poor before that for you to

even contemplate such a rate.

The first thing I noticed was that this is more like an application form rather than the executed agreement itself.

Do you have a copy of the actual agreement signed by both yourself and the company?

You see that one, apart from being unsigned does not have the length of time of the loan, nor the monthly payments.

I confess that I am unfamiliar with the way these loans work. You took out a loan of £400 and paid them £40 a month in interest, without reducing the loan amount?

I also cannot tie in the two APR rates. First it states that you pay 20% of the face value of the cheque, then it says it is 1413.1 without a percentage sign. Can you explain that please?

 

If you have the actual executed copy, that would be easier to check and see

that it complies with the Act. If it does, then you could fall back on the

"extortionate credit" rule that is covered in the Consumer Credit Act sections

137-140 [the Act is available on the forum for your perusal]where the Judge can amend the interest rate or void the whole contract if he thinks the interest rate is so far out of kilter with what one

would expect taking into account your credit history, age, experience and

prevailing interest rates at the time of the loan.

Near the end of the contract it does allow them to charge interest at the

same rate as earlier stated, so your debt will stack up pretty quickly.

Though as I am not sure how this loan/cash advance system works, so

it may not equate to the £100 they have added to your loan.

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They are not going to present the cheques as I have cancelled the cheque book.

 

I am paying £40 a month comfortably and have paid half of the £500 back.

 

My gripe is they added £100 on top of the £400 I owed when I cancelled the cheque book and told them I could only pay £40 p/m

 

Is there anybody I can speak to for advice like oft?

 

Matthew

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Matthew, no wonder you got into difficulties paying that sort of interest.

I guess your credit rating must have been pretty poor before that for you to

even contemplate such a rate.

The first thing I noticed was that this is more like an application form rather than the executed agreement itself.

Do you have a copy of the actual agreement signed by both yourself and the company?

You see that one, apart from being unsigned does not have the length of time of the loan, nor the monthly payments.

I confess that I am unfamiliar with the way these loans work. You took out a loan of £400 and paid them £40 a month in interest, without reducing the loan amount?

I also cannot tie in the two APR rates. First it states that you pay 20% of the face value of the cheque, then it says it is 1413.1 without a percentage sign. Can you explain that please?

.

 

 

I made a mistake in my earlier post! The interest per month (to extend the loan) was £80 not £40. It was £20 per £100 lent.

 

The way the loan works is...

 

 

On each payday you can either:

 

Pay back part of the loan in multiples of at least £100

 

Pay £20 per £100 to extend the lot to the next payday

Therefore for my £400 loan they wanted me to pay £80 p/m just to carry the loan over to the next month!

 

Do you know of any consumer body I can speak to in relation to this being extortionate

 

Thanks

 

Matthew

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Do you know of any consumer body I can speak to in relation to this being extortionate

 

trading standards would be a good place to start sir.

 

it might be also worth giving national debtline or cccs a call too.

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Thanks sequenci

 

I contacted local trading standards, they said pay the £400 you owe but do not pay the £100 they added in 'interest' and say if they want me to pay it then they can take me to court where I will argue the terms of their agreement to be unfair and unclear.

 

Matthew

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Just got a couple of questions...

 

When I break the news to them that they're not getting £100 of the money I think there's a high chance they could get a debt collection agency to do their dirty work.

 

Where do I stand In refusing to pay the DCA?

If they get a DCA should I take the lender to court?

 

Also, I will soon be moving address and intend on not keeping them updated, will this be frowned upon by any courts, or will it be seen as reasonable given the circumstances?

 

Any advice would be greatly appreciated :)

 

Matthew

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Matthew, many thanks for explaining how the system works.

 

Some pretty draconian interest rates and terms there.

 

You said that if you wanted to reduce the debt, you could only do it in multiples of £100. There is nothing in the contract that states that, and I

notice that you are now repaying at £40 per month. Is your statement about

£100 repayments wrong, or have they changed the rules as you are no longer

using cheques and they want their money. How much interest are they charging you per month now on the loan?

 

BTW if you paid off £100, what would be the interest charged for that month?

 

You didn't confirm that the APR figure of 1413.1 was the percentage figure

they charge. The reason I ask is that I have worked it out to a lower figure-

extortionate nevertheless though I didn't factor in the payable in advance part. The other reason I ask is that in addition to being extortionate, the

terms could also be onerous. And the APR has to be stipulated and accurate or

the contract is void.

 

Within the Consumer Credit Act here are a couple of extracts from the

relevant sections-

 

138.- (1) A credit bargain is extortionate if it –

 

 

(a) requires the debtor or a relative of his to make payments (whether unconditionally, or on certain contingencies) which are grossly exorbitant,

 

or

 

(b) otherwise grossly contravenes ordinary principles of fair trading.

 

(2) In determining whether a credit bargain is extortionate, regard shall be had to such evidence as is adduced concerning –

 

 

(a) interest rates prevailing at the time it was made,

 

(b) the factors mentioned in subsections (3) to (5), and

 

© any other relevant considerations.

 

(3) Factors applicable under subsection (2) in relation to the debtor include –

 

(a) his age, experience, business capacity and state of health; and

 

(b) the degree to which, at the time of making the credit bargain, he was under financial pressure, and the nature of that pressure.

 

(4) Factors applicable under subsection (2) in relation to the creditor include –

a) the degree of risk accepted by him, having regard to the value of any security provided;

(b) his relationship to the debtor;

 

© whether or not a colourable cash price was quoted for any goods or services included in the credit bargain.

 

Reopening of extortionate agreements

 

139.- (1) A credit agreement may, if the court thinks just, be reopened on the ground that the credit bargain is extortionate –

 

 

(a) on an application for the purpose made by the debtor or any surety to the High Court, county court or sheriff court; or

 

(b) at the instance of the debtor or a surety in any proceedings to which the debtor and creditor are parties, being proceedings to enforce the credit agreement, any security relating to it, or any linked transaction; or

 

© at the instance of the debtor or a surety in other proceedings in any court where the amount paid or payable under the credit agreement is relevant.

 

(2) In reopening the agreement, the court may, for the purpose of relieving the debtor or a surety from payment of any sum in excess of that fairly due and reasonable, by order –

 

 

(a) direct accounts to be taken … between any persons;

 

(b) set aside the whole or part of any obligation imposed on the debtor or a surety by the credit bargain or any related agreement,

 

© require the creditor to repay the whole or part of any sum paid under the credit bargain or any related agreement by the debtor or a surety, whether paid to the creditor or any other person.

 

(d) direct the return to the surety of any property provided for the purposes of the security, or

 

(e) alter the terms of the credit agreement or any security instrument…."

 

I have read a number of case where extortionate credit has been claimed

though none have been anywhere near the amount you are paying. Not sure

why people paying your sort of rate don't go to Court, unless they are settled

beforehand since the lender knows their chance of winning involve snowballs

and Hell.:p

 

The only people I believe who can determine whether the rates are penal are

Judges as confirmed by Trading Standards who I assume, would not commit

themselves to commenting on their thoughts of whether the rate was

extortionate or not. I agree with them that the terms are unfair and unclear

even ignoring the £100 charge they slapped on.

  • Haha 1
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Thank you very much lookinforinfo for your helpful reply.

 

Yes that is the case if i wanted to reduce the debt it had to be done in multiples of £100.

They are no longer using my cheques as I cancelled the cheque book with my bank. They have changed the rules to get me to pay £40 per month, but have slapped £100 onto the amount I owe for this.

 

I have been paying £40 per month on my payday using my bank card. Despite me asking them not to keep my card details they keep them and take £40 on my payday. Last payday they took £60 because I could only afford £20 the month before.

 

I have spoke to my bank and can cancel the the bank card whenever I like. They also made me sign a direct debit mandate so they could collect payment if all else fails, but apparently I can cancel DD under the DD guarantee.

 

At the moment they are not adding interest onto the amount.

I have just noticed where it says about the % interest

INTEREST will be charged at a rate of %on the credit provided, calculated at 20.00%ofthe face value of the cheque payable in advance. The Interest Rate may be varied when any change is made to the Bank Rate and notice will be given to the customer in writing.

In the paragraph above (from the credit agreement) there is a blank next to the first % sign, they did not write anything there. (I was emailed the credit agreement by the way)

It then says THE APR in respect of this service is 1413.1

They do not use a % sign in the line above.

Also the credit agreement is not signed by them before I signed it. The creditors name is in a computer font that looks like handwriting.

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Matthew your last post has really cleared up the questions I have-not that

that is your fault-it is the terms in the application that are so vague.

Do you have a copy of the document that you signed and they countersigned,

since if that one is similarly worded, there may be a way of challenging the

agreement regardless of the interest rate.

 

The whole thing just doesn't add up. Before, you paid £80 a month just to

defer paying a bit off the loan. Now, you are paying £40 a month, which is

being taken off the debt, and you say they are only charging you £100 in

interest for that [for a whole year?-if not, for how long?]. I suspect that they are adding more interest than that

in addition.

 

Forgot to answer your query about the change of address. There is a notice

in there that you advise them within 14 days of a change of address, though

no mention of the outcome of not informing them. I am not advising you to

say nothing about your move, but as long as you continue to pay them at

the agreed amount and I assume they probably have a mobile phone number

for you, they may not worry about it-especially if they don't find out.

However if they do, they have your bank card, and may decide to remove as

much out of your account as they can just after your pay arrives.

I strongly suggest you scrap that bank card and find another way of paying them. Can't you set up a monthly standing order instead ?

 

I wouldn't worry too much about DCAs. They are not going to get too excited

about chasing after £100.

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Thanks again, I have cancelled the bank card now, and rang the lender to ask to pay by standing order.

 

They said they are sending me a form out.

 

Maybe they are sending me a DD mandate? I always thought it was at my end the SO was set up

 

I have PM'ed you for your email address so I can email you my credit agreement

 

thanks

 

matthew

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Matthew, now that I fully understand the contract I now see how they APR can be that high.

Initially, you borrowed £320 for which you wrote four cheques for £100 each.

At the end of the first month, rather than pay the full amount, you elected

to rollover the loan of £320. The way the contract is worded however,[that

the interest is 20% of the value of the cheque] you are actually paying interest on the £400 not the amount you borrowed. So you are paying interest

on the interest- a real double whammy when the interest rate was already

sky high.

That isn't at all clear from the contract, though I accept that you might have

been more aware of it as you were involved in the transaction, so it may

have been clearer to you.

 

Also by applying interest on the value of the cheque, it makes it more difficult

[and expensive] to send in say two cheques to repay a £100 cheque over two months, since that would cost a further £20 in addition to the rollover cost. TS is right, the contract is unfair and unclear.

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The lender called me today to discuss my borrowing.

 

I explained that I had contacted TS who said I should refuse to pay the £100 they added.

 

I argued the case using the information and arguments given in this thread.

 

They agreed to reduce the £100 fee to £15 which I accepted. I will now be making my final payment next month which clears my balance with them.

 

Thanks very much for all the help in this thread, I'm sure someone else in a similar situation with these sort of lenders will find it useful.

 

Matthew :)

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  • 3 months later...

Hello

I hope you don't mind me continuing this thread as I also took a loan with these sharks at a time when I was desperate for cash, (to pay for electricity !)

 

My credit agreement looks just like Matthewluck1's with that horrendous APR.

 

I took the loan for £240 and have rolled the loan over month on month, paying the extension fee of £40. I have made 6 payments of the £40 which equals £240 (conveniantly) I also paid them £100 one month to reduce the capital amount owed. Therefore, I have in effect given them back all the money they lent me, just not their extortionate interest.

Since nearly having my house repossessed etc. (yes it's been a hard few months) I haven't paid them anything and yesterday, I got a phone call at work stating that I was in severe arrears and I need to cleart the balance.

 

I have asked them to send me a copy of my agreement which they have. It has an electronic signature where it says "signed on behalf of the creditor,) but it's a bit amateur, i.e they have just changed the font used to type it in order to make it look like a fancy signature.

 

I some questions and any pointers much appreciated.

 

1. The date of their signature is before the date I signed it, i.e. my signature is dated 11th July 06 whereas theirs is dated 3rd July 06. Therefore they executed the agreement before I signed it - does this mean anything in terms of "is it a properly executed agreement" also taking into account the "electronic fancy signature."

 

2. I want to tell them where to go. I have paid back £240 in extension fees plus £100 extra. The original advance was for £240. I was under immense financial pressure at the time with gas and electric company's forcing their way into my house etc. so I believe a judge would take this into account if they decided to proceed to court ?

 

3. As Matthew asked previously and I think this was missed, it states on the agreement that:

 

"The APR is 1268.2 APR" There is no % symbol after this amount. Is the agreement void in this case ?

 

If I am right in my thinking, and please correct me if not, I was thinking of a letter along the following lines:

 

Dear Sir/Madam

Further to our recent telephone conversations and the subsequent review of the credit agreement plus taking into account the amount of the original advance, it transpires that I have paid you back the sum of £240 plus £100 additional payments.

In accordance with the Consumer Credit Act Section 138, I deem the remainder of the agreement to constitute an extornionate credit bargain. I have inserted the relevant points from the Act below:

138.- (1) A credit bargain is extortionate if it

 

(a) requires the debtor or a relative of his to make payments (whether unconditionally, or on certain contingencies) which are grossly exorbitant,

or

(b) otherwise grossly contravenes ordinary principles of fair trading.

(2) In determining whether a credit bargain is extortionate, regard shall be had to such evidence as is adduced concerning

(a) interest rates prevailing at the time it was made,

(b) the factors mentioned in subsections (3) to (5), and

© any other relevant considerations.

(3) Factors applicable under subsection (2) in relation to the debtor include

(a) his age, experience, business capacity and state of health; and

(b) the degree to which, at the time of making the credit bargain, he was under financial pressure, and the nature of that pressure.

(4) Factors applicable under subsection (2) in relation to the creditor include

a) the degree of risk accepted by him, having regard to the value of any security provided;

(b) his relationship to the debtor;

© whether or not a colourable cash price was quoted for any goods or services included in the credit bargain.

 

I also conclude that upon reviewing the credit agreement thus signed, the terms and conditions most notably "Key Financial Information Section 3" and "Other Financial Information Section 4" are unclear terms that do not include either a monthly repayment or a loan term which contravenes the Consumer Credit Act.

 

In relation to the above, I do not acknowledge any debt to your company and no further payments will be made and I am acting in accordance with my rights under the Consumer Credit Act.

 

I am no longer resident at the address where I took out the loan and therefore, I would appreciate it if you would correspond with me at my work address, marking any items as "Private and Confidential."

 

Please feel free however to acknowledge this letter and the cessation of the agreement by email to:

 

Yours sincerely.

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