Fixed Sum Loan Agreement

[lucysid]

Hi, a basic enquiry, can an insurance company take money by direct debit a month earlier than stated on the Fixed sum loan agreement / direct debit guarantee ? I have for the past 2 years paid in arrears & when I renewed in March they took 2 payments 3 days apart, 1 for last years insurance & another for renewed insurance, paperwork states renewed policy payment will commence in April but when I spoke to them they said that me paying in arrears for last 2 years was a mistake, so took 2 payments in March to correct it to pay in advance. They didnt notify me of the change or that they taking money a month early & they dismissed the paperwork.

[nemesis45]

Re: Fixed Sum Loan Agreement

Hi welcome insurance premiums on monthly payments should always be payable in advance as if the
payment was in arrears technically you could be considered uninsured.

nem

[des8]

Re: Fixed Sum Loan Agreement

[QUOTE=nemesis45;539556 if the
payment was in arrears technically you could be considered uninsured.

nem[/QUOTE]

I doubt that reasoning is correct.
The full annual premium has been paid upfront by the loan
Premiums are calculated on an annual basis. If paid by instalments an interest charge is added and the result divided by the number of instalments (generally 11 or 12).
If there is a claim during the period of insurance, any payment will be reduced by the amount of annual premium outstanding.(which will be credited to the lender)

There is no technical reason for requiring the instalments in advance, except of course if the borrower cancels the lender might have problems collecting the missing instalment.
Hence it is normal to collect in advance, and each renewal is a new loan so payment dates could be reset.

[lucysid]

Re: Fixed Sum Loan Agreement

Hi, thank you for your replies, I have no problem with paying in advance my issue is that they set the payment dates, sent me the confirmation as they had done for the last 2 years & then decided to change it, without informing me thus taking 2 payments out in 3 days leaving my account short for other debits. Does this mean that the fixed sum loan agreement & direct debit guarantee are pointless as the commencement date on them is wrong

[des8]

Re: Fixed Sum Loan Agreement

If they gave you start dates they should not change them without advising you at least 10 days in advance in writing.
If that is what they have done you can obtain an immediate refund under the DD guarantee scheme. Just ask your bank for it and they SHOULD instantly refund you.
If you have problems refer it to:http://www.directdebit.co.uk/DirectD...Guarantee.aspx

If this problem has caused you other costs, claim those costs back from the originator,

[lucysid]

Re: Fixed Sum Loan Agreement

Thank you des8