Boiler loan default, remainder of loan sold onto another company

[jonjonbb]

Hi Folks
I am trying to help sort out my father’s finances.
He defaulted on a boiler loan, and the loan was sold on to another company who want £3000.
Im suggesting he appeal either to fin Ombudsman [though I have read here that they are not much use] or court eg. The decision to sell on the loan, the repayment levels.

He took out a loan for a new boiler in 2008, and has defaulted. The loan term was 120 months/10yrs. Apr 20.8%. ‘Current monthly rate 1.468%’
My father paid on time by direct debit until he defaulted in late 2013, early2014. He defaulted as he as didn’t keep an eye on his finances.
The total my dad paid, was from 2008 to 2014: £4031.97 (excluding any interest charges).


I need help with a few things.
1: At the start of the loan how much did he actually have to pay including interest. Going thru the original papers see photo: boiler loan 2ed. It looks like £3819.29 for the boiler and installation. And £4620.91 interest. So a total of £8440.2 is correct?
In photo Img_0007ed, The amount owed in march 2014 was £3084.79, and the Shortfall of capital was £2576.08. so an approx total £5660.87. So what is the correct amount?


2: The repayment level makes no sense, see photos: imged to img007ed.
Each month he paid £68.21 a month, however in the same month approx £50 of interest was added back to the loan amount. Meaning only £15 to £20 a month was paying off the loan. Which would amount to approx a maximum of £240 a yr, or £2400 for the ten year loan period. Which does not even pay back the boiler price of £3819.29.
Were the monthly repayment level and other interest calculations, additions, details correct?


thanks
Jon

[Debt Camel]

Re: Boiler loan default, remainder of loan sold onto another company

Im suggesting he appeal either to fin Ombudsman [though I have read here that they are not much use] or court

Well the Ombidsman can make a ruling in your favour if the situation is unfair, whereas a court case will look at the letter of the law. Sometimes you are better going with one, sometimes with the other - neither is always best.

eg. The decision to sell on the loan, the repayment levels.

Your father defaulted. I don't see there is any grounds for complaining that the loan was sold - what are you suggesting?

It looks like £3819.29 for the boiler and installation. And £4620.91 interest. So a total of £8440.2 is correct?

Looks like it - although the interest rate is actually variable so that will be an illustration assuming the interest rate remains the same.

In photo Img_0007ed, The amount owed in march 2014 was £3084.79, and the Shortfall of capital was £2576.08. so an approx total £5660.87. So what is the correct amount?

I agree that is not a very helpful document. My guess is that it is only looking at the interest that should have been charged up to the date of the statement - this is why it comes to a lot less than the total that would be payable over the full term of the loan.

Each month he paid £68.21 a month, however in the same month approx £50 of interest was added back to the loan amount. Meaning only £15 to £20 a month was paying off the loan. Which would amount to approx a maximum of £240 a yr, or £2400 for the ten year loan period. Which does not even pay back the boiler price of £3819.29.

In most loans you make the same repayment each month. At the start this is mostly paying off interest being accrued, with only a little capital repaid. but that little capital means less interest is charge the next month so a bit more capital is repaid.

If you put £3820, 120 months and 20.8% APR in to this loan calculator http://www.moneysupermarket.com/loans/calculator/ it gives the monthly repayment as £71,42. The difference between this and your dad''s actaul repayment of £68 is probably due to the fact that he paid the £75 acceptance fee up front.

I can't see anything that looks wrong.

[jonjonbb]

Re: Boiler loan default, remainder of loan sold onto another company

DC, thanks so much for clarifying things.
part of my confusion was that my father had told me the boiler cost about £4000.
wow, £8000 for the boiler, had i known. i would have certainly advised the purchase of a 2nd hand boiler in fine condition for £1000