Query on loans.co.uk PPI offer

[danboy381]

Hello everyone, we've just received an offer from loans.co.uk on our ppi mis sell, but have a couple of queries;

 

The offer letter states uk witholding tax has been deducted from the 8% gross interest amount. Never heard of this, is it right?

 

Secondly, it says ' since you are not crediting this payment to your outstanding loan amount (the loan is still running), you will continue to pay the lender the amount borrowed in respect of the ppi premium and any associated interest for the remaining term of the loan'

 

Is that right? I thought the lender, in this case ge money would restructure the loan automatically once the broker notified them of the ppi refund? How can we be expected to keep paying the ppi cost and interest for the remaining 5 years of this loan, unless of course the refund more than covered all that which is doesnt...

 

Any help much appreciated!

[ims21]

Hello everyone, we've just received an offer from loans.co.uk on our ppi mis sell, but have a couple of queries;

 

The offer letter states uk witholding tax has been deducted from the 8% gross interest amount. Never heard of this, is it right? Yes it is correct

 

Secondly, it says ' since you are not crediting this payment to your outstanding loan amount (the loan is still running), you will continue to pay the lender the amount borrowed in respect of the ppi premium and any associated interest for the remaining term of the loan'

 

Is that right? I thought the lender, in this case ge money would restructure the loan automatically once the broker notified them of the ppi refund? How can we be expected to keep paying the ppi cost and interest for the remaining 5 years of this loan, unless of course the refund more than covered all that which is doesnt...

 

This will depend on the amount they are actually giving you back. Have you got all of the statements of account and the agreement?

 

Any help much appreciated!

 

 

ims

[danboy381]

Hi ims thanks for the reply.

 

The ppi premium was £4, 800.00. The refund offered is the 4, 800 , plus interest paid on the premium to date of 3414 plus 8% interest on the payments made towards the ppi of 1781.

 

If the matter was resolved now, and the loan restructured, the figures offered are pretty much correct by our own calculations.

 

Trouble we have is the loan is still running, and does so until 2020, (variable rate, so is impossible to know exactly what we will pay in the future), and as the letter from the broker states, we will continue paying for the policy through the interest on the loan!

 

I thought the loan would automatically be restructured, with all ppi and interest removed forever!

[ims21]

The difference in this case is that the loan cannot be restructured because Loans.co.uk are not the lender and have no power to make an alteration to the agreement.

 

Had this PPI been refunded by the lender you would have got back the premiums paid to date and the associated interest. The loan would then have been restructured to remove the future PPI form the remainder of the loan.

 

What Loans.co.uk have done is refunded you the total premium which features on the agreement and that includes the future part yet to be paid.

 

In order to get the loan to a position it would have been in had the PPI not been applied, you would need to make a capital payment to the loan to reduce the balance to what it would have been had the PPI not been applied. That capital payment would need to be equal to the PPI that has not yet been paid.

 

If you can post up the figures for the cash loan amount, the total term of the loan and the total monthly repayment I'll work out that figure for you.

LoanAnalysis.xls

[danboy381]

Hi , thanks.

 

The Original loan was for 40k plus the 4800, so 44800. Taken out may 05 over 15 yrs.. Monthly repayments tied to base rate but currently approx £450.00 pcm

 

not sure what you mean by making capital payment to reduce the loan? The lender ge money shd surely do this?

 

Thx again.

[ims21]

Ok not so easy to work out due to variable rate but I'll have a bash. Give me a few mins.

 

GE can't make the capital reduction because the total premium has been (or will be) refunded to you.

[ims21]

OK well the best I can do using £450 as an average repayment for the months to date is that there is a capital balance on the PPI of £2,853 yet to be paid off.

 

If you took that amount from your PPI refund and paid it into the loan account then that should broadly put it back to a position it would have been in had the PPI not been added in the first place.

[danboy381]

Hi ims thank you for that. Im still totally confused though as weve been defrauded of the 4800, which we have paid and are being refunded, and you then say to bring the loan back to where it was without the ppi, we have to put cash back into it, so surely we should have to work out exactly what is due and demanding more from loans.co.uk?

 

cheers. Danboy.

[ims21]

First off you have not been defrauded, you have been mis-sold.

 

The £4800 is being refunded to you in total even though you have not paid it all yet. In effect you are getting money back that you haven't actually parted with yet.

 

So in order to put the loan back to where it would have been, the as yet unpaid part of the PPI would have to be paid into the account. That would reduce the balance and, as a result, the future interest. That puts the account back to where it would have been had the PPI not been charged in the first place.

 

As said, the loan cannot be restructured for the reasons stated. If it were possible to restructure the loan, your redress would not have been the total PPI premium but only the part you have actually paid (plus the interest of course).

 

So you would have received less in the way of refund and a restructured loan.

 

In your case your are getting the full premium and no restructure of the loan. If you want the loan put back to where it would have been you will have to make a payment into it equivalent to the amount that has not yet been paid.