Do you really only owe the loan plus one month's interest?

[segway]

Hi guys,

 

I have been reading quite a few of the threads on here and some of the advice that keeps coming up is that when negotiating with payday loan companies for reduced payments, you are only legally required to pay off the original loan plus one month's interest. Even if the creditor keeps adding interest and charges you should insist on only repaying that amount. Could someone please tell me whether this is actually true or not? Is there any legal basis for this?

 

Personally I do not think this is true as I have been told that once you agree to the contract with the PDL company they have the right to add interest at the end of every month the debt is not settled. When negotiating my repayment plans, I fully expect to pay far more than original loan + 1 month interest in the long run, unless the companies agree to totally freeze interest. However, I would like to know 100% where I stand legally before I start negotiating, no point wasting money on interest if I dont have to!

 

On another note, I wonder if anyone could help me with the following question:

 

I have been looking at the letter templates for contacting creditors on the national debtline website, and it seems that when you contact them with your budget sheet asking for a reduced payment plan, you need to give a reason as to why your circumstances have changed and you are unable to pay the full amount (for example reduced working hours, unemployment etc). My circumstances haven't changed per se, I've just realised that after months of pointlessly rolling over loans and splurging my entire salary on interest payments, without making a dent into the actual debt itself, I've had enough and cant stand any more. Is this a viable excuse for requesting reduced payments? Even though my circumstances haven't changed? If so, does anyone have any advice on how to word this in a letter?

 

Thanks for taking the time to read my questions, I would really appreciate any advice you can give.

[ksmiggy]

It's as good an excuse as any in my opinion, but they are funny buggars, while some may accept that no one can go on paying forever, others seem to think it's fine.

As for the loan plus 1 month issue, I believe it is being looked into.

I have to admit, I always view it as is it fair to both sides, I do expect to have to pay a bit extra for taking longer, but ony to a point, textloan reduced their charges by more than half after I argued it with them and offered what I thought was fair. I think it's a case of your own judgement and is it right for you, although the purists for want of a better word will say loan + 1 month

[segway]

thanks for your response ksmiggy, very helpful. I've actually started negotiating with Txtloan over a £300 loan I have with them. So far they have offered to accept reduced monthly payments if I pay "the full overdue balance", which will be frozen at £499.60. Is this reasonable compared to what you negotiated, or should I try to bargain them down a bit?

[ksmiggy]

that's about what they offered me, I asked for a breakdown of the charges and got a long winded explanation that made little sense. I said it was unfair and countered with

 

Thankyou again for your prompt responses, however having spoken to consumer direct and other agencies who have advised me of the CCA , in particular Section 87 , I would like to offer 6 payments of £60 to clear this debt in it's entirety, commencing 04/08/2011, the final payment being made 04/01/2012, if extra payments can be made inbetween, I shall do so understanding earlier payment would not reduce the amount further.

Regards

 

To which I recieved no response, so I added :-

 

I do feel that the extra charges are disproportionate, totalling almost 50% of the original loan , and as such in breach the the CCA, however I do understand that by allowing me pay over a longer term, something should be charged, so in the interest of fairness and getting this sorted out, I am will to ammend my above offer and include an extra £60 payment on the 4/02/2012, meet you halfway as it were, I believe this would be a fairer settlement and would not breach any regulations contained in the CCA or CPUTR. I trust this will be a satisfactory offer and await your acceptance so that payments can commence.

Regards

 

I ended up paying the first payment ,no response , so i added.

 

I have set up a standing order to pay £60 on the 4th of each month, I am however still awaiting your response to my offer regarding charges, I would be greatful if you could confirm that you accept my propasal as satisfactory to conclude this matter.

 

then recieved the breakdown of charges .

 

so added

 

I understand all your charges , however they bear no relation to the actual cost involved in the process for example of sending an overdue reminder and as such are unlawful, I have offered a compromise in the belief that as you say, I am asking you to extend the term of the loan. I do believe these charges should be fair and not excessive , I once again make my offer of a compromise by dropping the last £79 payment, rest assured all other payments will be maintained without problem and this matter can be concluded.

 

Should you still maintain that these charges are fair, I shall have no option other than to report them to the OFT and once paid I shall seek to recover said charges and any costs involved in doing so , on the grounds that they are unfair and unlawful.

 

I hope it will not come to this, as all I want to do is come to a fair and reasonable agreement regarding this matter, I have shown my intentions to pay by making contact and payment and ensuring future payment arrangements are in place. I feel your charges are unfair and unlawful and ask that you consider my compromise offer.

 

then they responded with a plan that was £352 in total( about what I owed)+the payment I had made of £60 so they have added £60 for paying over 6 months.

 

not ideal, but gets it sorted.

hope this helps

Edited September 7, 2011 by ksmiggy
clarity

[cooldude1980]

Not sure what the legal issues with this is, but in my experience payday loan companies will settle for capital and 1 month interest.Cash Genie - when in court accepted this also...so I can only presume that if they are accepting at the Court stage thats what they think they are entitled too?