Tesco Personal Loan (top-up)

[shaniannie]

(I'm not sure I've posted this in the right place, if it's in the wrong place could someone move it for me please )

 

As I'm in the process of making a claim on my house insurance for 2 damaged computers I've been reading up all the (interesting!) information and cases on this site and it got me to thinking about something I've been stewing over for a while, but put it down to "well they did it that way, so obviously they're right"....

 

In 2004 we bought our house and took out a tesco personal loan to cover some costs and consolidate debts. They had the best interest rate at the time. In May of 2006 our main car needed replacing so we took Tesco up on the offer of a "top-up" loan. It wasn't until after everything had been signed and moneys paid that I looked closely at all the figures.

 

At the beginning of the original loan in 2004 the interest for the full term of the loan (5 years) was added to the loan amount. When we took the "top up" loan it was indeed a new loan, to cover the total amount of the original loan, including 5 years worth of interest - when we'd only had the loan out for around 18 months.

 

I can't for the life of me remember exact figures (but do have every bit of paperwork in the house, I don't throw away a THING!) but it was something like a £10,000 original (2004) loan at an interest rate of 5.6%.

 

I know a lot of time has passed now (just over a year from the date we took out the "top up" loan), but reading this site has got me intrigued. I don't tend to take things lying down and have had some successes with complaints with Tiscali (broadband) the Tax Credit office and various high street retailers.

 

I know that my partner has had previous loans with other banks (mainly Barclays) and if he paid them off early, or took out a further loan from them they would refund the interest that was added to cover the remainder of the term of the original loan.

 

Could someone tell me whether or not Tesco was right to charge us the full 5 years worth of interest when that loan was essentially paid off after just 18 months? I know that some companies have "early repayment" policies but 3.5 years worth of interest seems quite a lot!

 

Thanks in advance for any help/suggestions

[shaniannie]

*bump*

 

Anyone?

 

Are these companies supposed to return interest that was added to a loan if the loan is repaid early, or will this be in the individula t's & c's? In my case, 3.5 years of interest on a £10k loan....

[stevepike]

I read the post, Tesco Personal Loan (top-up). It is very informative. Thank you for the information.

[steven4064]

Shaniannie

 

I don't think it is quite as simple as that (the answer to your question would be 'no'). What usually happens is that the first loan will have been considered paid off early and subject to the usual early payment fees, etc. THese will have been on your original loan - there will have been a section which gave you the amount you would have to pay to repay the loan at 1/4, 1/2 and 3/4 of the full term. I suspect that that is what they have charged you and then created a new loan for that amount plus the loan for the car.

 

Perhaps you can give us all the figures so we can check.

 

Every little helps (Tesscos, that is )

 

stevepike - welcome to CAG

[Dipply75]

Firstly - you won a fight with the Tax Credits? I am impressed!

 

I am very interested in how you get on as my friend has the same sounding situation with 2 LVE loans. The first was a over 3 years, she asked to borrow more money 17 months in. They told her verbally this was a 'top up' but what she received was a bog standard, brand new agreement for the new amount over 5 yrs inc. paying off the original loan - no rebates at all, even for PPI.

 

Like you, shaniannie, I would expect to see some rebate, early settlement etc or just some reference to a top up, not just paying off one with another new agreement.

 

How does the top up thing work then and does this allow companies to ignore your early settlement rebate rights?

 

Oh, and I must apologise to you shaniannie as this is the 2nd time I have butted into one of your threads to ask a question. I will start a thread but am interested on how you get on : )

 

You seem to suffer the same idiot companies as us lol!

[steven4064]

Shaniannie

 

can you provide the following information for the two loans:

 

Loan amount

Monthly repayment and number of months

APR

Settlement figures for 1/4, 1/2 and 3/4 term

 

For the first loan, how many payments had you made

For the second loan, what was the amount for the car (ie over and above the settlement of the first loan)

 

I will check the figures and see if I can make sense of what they have done.

 

If you don'twant to post the information on the open forum, send it me by PM, if you want.

[paulwlton]

If a loan is paid off early you are entitled to an interest rebate.

[Glennigogs]

If a loan is paid off early you are entitled to an interest rebate.

 

Is that only applicable if you have a flexible loan?

I'm just a little green on these things but I was under the impression that you had to pay all the interest off if you paid up quickly anyhow, unless you had a flexible loan. Or is it something to do with sucure and unsecured loans...please tell, someone??