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is this even legal?


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I truly hope someone here can help, this is a really serious problem.

My elderly in-laws had a problem with their boiler last year and British Gas came out and sorted them out a new boiler with GE Money Finance

Recently my father-in-law mentioned money problems and said that the loan repayments were crippling them, i took a look at the p/work and the early redemption penalties are appaling!

 

when a qrtr of term has elapse £905.61 to be paid for every £1000 borrowed

when half of term has elapse £727.32 to be paid for every £1000 borrowed

when three qrtr of term has elapse £449.78 to be paid for every £1000 borrowed

 

this is to be paid ON TOP of the repayment of the loan which is less than £5k borrowed, which means at any point over the next TEN YEARS if they want to pay this back its going to cost them a minimum of around £7,500 up to almost DOUBLE what they borrowed!

 

That is not the only problem I have discovered. On the T&C on the back of the p/work it clearly states

5.1 The customer may settle this agreement at any time by giving GE Money written notice of their intention to do so and by paying the balance outstanding plus a fee equal to 1 months interest on the balance outstanding on the day immediately before settlement

 

So their Loan p/work doesn't even agree with itself!!

 

I tried to call British Gas to find out what this was about but they claim GE doesn't even do their lending and wouldn't even let me speak to their finance team to ask general questions about rates and stuff.

this couple are in their 70's and are worried sick that this company are going to dry every penny they can out of them.

 

What on earth can I dom where do we stand? has anyone any ideas at all??

Thanks xx

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KT

 

Can you post the T&Cs covering early redemption penalties so we can have alook at them.

 

Steven

 

If this post is helpful, please click the scales

Steven

 

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My Wins

 GE Money Won unconditionally May 2007

NatWest Won unconditionally August 2007

Brighthouse Won unconditionally August 2007

Goldfish Won unconditionally April 2008 (including CI on the basis of Sempra)

Clydesdale Financial Services (now BPF) Won unconditionally February 2008

 

Any opinions are without prejudice & without liability. Do not take any legal action on my advice alone. Almost everything I know concerning the law I learned from this site.

 

Please note, I will not give advice by PM. Please send a link to your thread and I will do my best to answer there.

 

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It says

 

Key information

If you exercise your right to settle this agreement early, the following amounts will be payable for every £1000 borrowed

 

When a quarter of term has elapsed £905.61 to be paid

when half of term has elapsed £727.32 to be paid f

when three quarters of term has elapsed £449.78 to be paid

 

These amounts are only illustrative, as they take no account of any variation which might occur under this agreement

 

That is the only info it gives but then as mentioned clause 5.1 disagrees with this info!

 

can you help??

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I think in the first instance it is probably wort hwriting to the OFT. THis doesn't look like a fair term but I haven't had chance to look in the Unfair Terms in Consumer Contract Regulations - I'll see if I can later.

 

Steven

 

If this post is helpful, please click the scales

Steven

 

Using CAG Toolbar will generate much needed income - Download Here

 

Confused by Simple Interest? Confounded by Compound Interest? Read my Interest Tutorial

My Wins

 GE Money Won unconditionally May 2007

NatWest Won unconditionally August 2007

Brighthouse Won unconditionally August 2007

Goldfish Won unconditionally April 2008 (including CI on the basis of Sempra)

Clydesdale Financial Services (now BPF) Won unconditionally February 2008

 

Any opinions are without prejudice & without liability. Do not take any legal action on my advice alone. Almost everything I know concerning the law I learned from this site.

 

Please note, I will not give advice by PM. Please send a link to your thread and I will do my best to answer there.

 

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The following extracts from the Unfair Terms in Consumer Contract Regulations 1999 might be of interest:

 

 

SCHEDULE 2

INDICATIVE AND NON-EXHAUSTIVE LIST OF TERMS WHICH MAY BE REGARDED AS UNFAIR

1. Terms which have the object or effect of-

(d) permitting the seller or supplier to retain sums paid by the consumer where the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract;

 

(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;

(f) authorising the seller or supplier to dissolve the contract on a discretionary basis where the same facility is not granted to the consumer, or permitting the seller or supplier to retain the sums paid for services not yet supplied by him where it is the seller or supplier himself who dissolves the contract;

(i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract;

 

It might be better to contact your local trading standards rather than OFT in the first instance.

 

 

 

Steven

 

If this post is helpful, please click the scales

Steven

 

Using CAG Toolbar will generate much needed income - Download Here

 

Confused by Simple Interest? Confounded by Compound Interest? Read my Interest Tutorial

My Wins

 GE Money Won unconditionally May 2007

NatWest Won unconditionally August 2007

Brighthouse Won unconditionally August 2007

Goldfish Won unconditionally April 2008 (including CI on the basis of Sempra)

Clydesdale Financial Services (now BPF) Won unconditionally February 2008

 

Any opinions are without prejudice & without liability. Do not take any legal action on my advice alone. Almost everything I know concerning the law I learned from this site.

 

Please note, I will not give advice by PM. Please send a link to your thread and I will do my best to answer there.

 

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I suspect you are mis-reading the terms of the contract. The figures quoted will be the total amount you have to pay to redeem the loan - i.e. if you repay the loan half way through then you pay 727.32 to pay off every 1000 originally borrowed and nothing else. The 727.32 will include the 1 month penalty interest.

 

The 727.32 reflects the fact that in these type of arrangements you are paying off only small amounts of capital in the early years and hence most of the repayments at the start of the agreement are going towards paying interest. I reckon your relations must be paying an interest rate of about 18% (that's a flat rate - APR rate would be higher).

 

 

18.37%

 

 

 

1

£1,000.00

£15.31

-£18.26

£997.05

2

£997.05

£15.26

-£18.26

£994.05

3

£994.05

£15.22

-£18.26

£991.01

4

£991.01

£15.17

-£18.26

£987.92

5

£987.92

£15.12

-£18.26

£984.78

6

£984.78

£15.08

-£18.26

£981.60

7

£981.60

£15.03

-£18.26

£978.36

8

£978.36

£14.98

-£18.26

£975.08

9

£975.08

£14.93

-£18.26

£971.75

10

£971.75

£14.88

-£18.26

£968.36

11

£968.36

£14.82

-£18.26

£964.93

12

£964.93

£14.77

-£18.26

£961.44

13

£961.44

£14.72

-£18.26

£957.90

14

£957.90

£14.66

-£18.26

£954.30

15

£954.30

£14.61

-£18.26

£950.65

16

£950.65

£14.55

-£18.26

£946.94

17

£946.94

£14.50

-£18.26

£943.18

18

£943.18

£14.44

-£18.26

£939.36

19

£939.36

£14.38

-£18.26

£935.48

20

£935.48

£14.32

-£18.26

£931.54

21

£931.54

£14.26

-£18.26

£927.54

22

£927.54

£14.20

-£18.26

£923.48

23

£923.48

£14.14

-£18.26

£919.36

24

£919.36

£14.07

-£18.26

£915.17

25

£915.17

£14.01

-£18.26

£910.92

26

£910.92

£13.94

-£18.26

£906.60

27

£906.60

£13.88

-£18.26

£902.22

28

£902.22

£13.81

-£18.26

£897.77

29

£897.77

£13.74

-£18.26

£893.26

30

£893.26

£13.67

-£18.26

£888.67

31

£888.67

£13.60

-£18.26

£884.02

32

£884.02

£13.53

-£18.26

£879.29

33

£879.29

£13.46

-£18.26

£874.49

34

£874.49

£13.39

-£18.26

£869.62

35

£869.62

£13.31

-£18.26

£864.67

36

£864.67

£13.24

-£18.26

£859.64

37

£859.64

£13.16

-£18.26

£854.54

38

£854.54

£13.08

-£18.26

£849.37

39

£849.37

£13.00

-£18.26

£844.11

40

£844.11

£12.92

-£18.26

£838.77

41

£838.77

£12.84

-£18.26

£833.35

42

£833.35

£12.76

-£18.26

£827.85

43

£827.85

£12.67

-£18.26

£822.26

44

£822.26

£12.59

-£18.26

£816.59

45

£816.59

£12.50

-£18.26

£810.83

46

£810.83

£12.41

-£18.26

£804.98

47

£804.98

£12.32

-£18.26

£799.04

48

£799.04

£12.23

-£18.26

£793.02

49

£793.02

£12.14

-£18.26

£786.90

50

£786.90

£12.05

-£18.26

£780.68

51

£780.68

£11.95

-£18.26

£774.37

52

£774.37

£11.85

-£18.26

£767.97

53

£767.97

£11.76

-£18.26

£761.46

54

£761.46

£11.66

-£18.26

£754.86

55

£754.86

£11.56

-£18.26

£748.16

56

£748.16

£11.45

-£18.26

£741.35

57

£741.35

£11.35

-£18.26

£734.44

58

£734.44

£11.24

-£18.26

£727.42

59

£727.42

£11.14

-£18.26

£720.30

60

£720.30

£11.03

-£18.26

£713.06

61

£713.06

£10.92

-£18.26

£705.72

62

£705.72

£10.80

-£18.26

£698.26

63

£698.26

£10.69

-£18.26

£690.69

64

£690.69

£10.57

-£18.26

£683.00

65

£683.00

£10.46

-£18.26

£675.20

66

£675.20

£10.34

-£18.26

£667.28

67

£667.28

£10.21

-£18.26

£659.23

68

£659.23

£10.09

-£18.26

£651.06

69

£651.06

£9.97

-£18.26

£642.77

70

£642.77

£9.84

-£18.26

£634.35

71

£634.35

£9.71

-£18.26

£625.80

72

£625.80

£9.58

-£18.26

£617.12

73

£617.12

£9.45

-£18.26

£608.31

74

£608.31

£9.31

-£18.26

£599.36

75

£599.36

£9.18

-£18.26

£590.27

76

£590.27

£9.04

-£18.26

£581.05

77

£581.05

£8.89

-£18.26

£571.69

78

£571.69

£8.75

-£18.26

£562.18

79

£562.18

£8.61

-£18.26

£552.52

80

£552.52

£8.46

-£18.26

£542.72

81

£542.72

£8.31

-£18.26

£532.77

82

£532.77

£8.16

-£18.26

£522.67

83

£522.67

£8.00

-£18.26

£512.41

84

£512.41

£7.84

-£18.26

£501.99

85

£501.99

£7.68

-£18.26

£491.42

86

£491.42

£7.52

-£18.26

£480.68

87

£480.68

£7.36

-£18.26

£469.78

88

£469.78

£7.19

-£18.26

£458.71

89

£458.71

£7.02

-£18.26

£447.47

90

£447.47

£6.85

-£18.26

£436.06

91

£436.06

£6.68

-£18.26

£424.48

92

£424.48

£6.50

-£18.26

£412.71

93

£412.71

£6.32

-£18.26

£400.77

94

£400.77

£6.14

-£18.26

£388.65

95

£388.65

£5.95

-£18.26

£376.34

96

£376.34

£5.76

-£18.26

£363.84

97

£363.84

£5.57

-£18.26

£351.15

98

£351.15

£5.38

-£18.26

£338.26

99

£338.26

£5.18

-£18.26

£325.18

100

£325.18

£4.98

-£18.26

£311.90

101

£311.90

£4.77

-£18.26

£298.41

102

£298.41

£4.57

-£18.26

£284.72

103

£284.72

£4.36

-£18.26

£270.82

104

£270.82

£4.15

-£18.26

£256.71

105

£256.71

£3.93

-£18.26

£242.38

106

£242.38

£3.71

-£18.26

£227.83

107

£227.83

£3.49

-£18.26

£213.05

108

£213.05

£3.26

-£18.26

£198.05

109

£198.05

£3.03

-£18.26

£182.83

110

£182.83

£2.80

-£18.26

£167.37

111

£167.37

£2.56

-£18.26

£151.67

112

£151.67

£2.32

-£18.26

£135.73

113

£135.73

£2.08

-£18.26

£119.55

114

£119.55

£1.83

-£18.26

£103.12

115

£103.12

£1.58

-£18.26

£86.44

116

£86.44

£1.32

-£18.26

£69.50

117

£69.50

£1.06

-£18.26

£52.30

118

£52.30

£0.80

-£18.26

£34.84

119

£34.84

£0.53

-£18.26

£17.12

120

£17.12

£0.26

-£18.26

-£0.88

All comments are my personal views - if in doubt then seek professional advice. If you think i've helped then please tip my scales.

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I tried to insert a spreadsheet to prove the figures in my post above but it hasnt worked very well. PM your email address and i'll email it to you. If I were you I'd ask for written confirmation from the lender that the position I have outlined above is correct but I'm sure it is.

 

Cheers

All comments are my personal views - if in doubt then seek professional advice. If you think i've helped then please tip my scales.

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so if i understand right, if they pay back after 30 months (a quarter of term) its £905.61 x 5 = 4528.05. plus 30 payments of £84.98 = £2549.40

That means that it would have cost them to repay 7077.45! good lord thats high!

 

how is is that they can take so much when the loan is paid back? total repay over full term is £10,197.60

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so if i understand right, if they pay back after 30 months (a quarter of term) its £905.61 x 5 = 4528.05. plus 30 payments of £84.98 = £2549.40

That means that it would have cost them to repay 7077.45! good lord thats high!

 

how is is that they can take so much when the loan is paid back? total repay over full term is £10,197.60

No, if they borrowed £5k then they would have to pay 905.61 x 5 = 4528.05. This represents the original amount borrowed plus interest charged over the period less repayments made over the period plus one months interest as a penalty.

All comments are my personal views - if in doubt then seek professional advice. If you think i've helped then please tip my scales.

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so if i understand right, if they pay back after 30 months (a quarter of term) its £905.61 x 5 = 4528.05. plus 30 payments of £84.98 = £2549.40

That means that it would have cost them to repay 7077.45! good lord thats high!

 

how is is that they can take so much when the loan is paid back? total repay over full term is £10,197.60

quote]

Sorry ....I now understand the point you are making - the total amount repayable is high but thats simply a function of the high interest rate and relatively long term (10 years). The total amounts repayable on a domestic mortgage over 25 years are similarly eye watering !:)

All comments are my personal views - if in doubt then seek professional advice. If you think i've helped then please tip my scales.

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I reckon your relations must be paying an interest rate of about 18% (that's a flat rate - APR rate would be higher).

 

Stornoway

 

GE Money typically have APRs of 29.9% for store cards and something similar for loans.

 

I think your analysis is probably correct - it certainly makes sense. I can't imagine even in this country with its completely corrupt finanial institutions that a company could get away with the sort of penalties assumed at the begining of this thread.

 

Steven

 

 

If this post is helpful, please click the scales

Steven

 

Using CAG Toolbar will generate much needed income - Download Here

 

Confused by Simple Interest? Confounded by Compound Interest? Read my Interest Tutorial

My Wins

 GE Money Won unconditionally May 2007

NatWest Won unconditionally August 2007

Brighthouse Won unconditionally August 2007

Goldfish Won unconditionally April 2008 (including CI on the basis of Sempra)

Clydesdale Financial Services (now BPF) Won unconditionally February 2008

 

Any opinions are without prejudice & without liability. Do not take any legal action on my advice alone. Almost everything I know concerning the law I learned from this site.

 

Please note, I will not give advice by PM. Please send a link to your thread and I will do my best to answer there.

 

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