Any finance type people / experts

I recently repaid a loan with HSBC. I took out the loan in 2004 and it was for £25,000 over 8 years with an APR of 6.9%. I recently returned from Cyprus with the means to pay off the loan which I did 17 months early. My settlement figure was 5500 save a few quid which meant the total repaid by me was £32,000. There was no interest refunded or taken off for the fact I settled 17 months early. When I queried this I was told the loan was front loaded. I have no idea what that means and it certainly was not mentioned when I took out the loan. I spoke to the Financial Ombudsman who advised me to get the terms and conditions of the loan which I did and in it it quite clearly states "the interest will be repaid over the whole term of the loan."

I am pursuing this with the financial ombudsman and today HSBC called and offered me £200 in way of a settlement. Shall I take that or do you think I can get more?

Any advice would be kindly and greatly appreciated.

I recently repaid a loan with HSBC. I took out the loan in 2004 and it was for £25,000 over 8 years with an APR of 6.9%. I recently returned from Cyprus with the means to pay off the loan which I did 17 months early. My settlement figure was 5500 save a few quid which meant the total repaid by me was £32,000. There was no interest refunded or taken off for the fact I settled 17 months early. When I queried this I was told the loan was front loaded. I have no idea what that means and it certainly was not mentioned when I took out the loan. I spoke to the Financial Ombudsman who advised me to get the terms and conditions of the loan which I did and in it it quite clearly states "the interest will be repaid over the whole term of the loan."

I am pursuing this with the financial ombudsman and today HSBC called and offered me £200 in way of a settlement. Shall I take that or do you think I can get more?

Any advice would be kindly and greatly appreciated.

I'm no expert mate, but £200 for 17 months early?
Sounds like a bit of a piss-take to me?

Hope you get more fella!

Speak to the ombudsman and follow their advice - you may have to make a complaint direct to the bank first - if they do not resolve the issue then the ombudsman should look at it for you.

Locate as much as your documentation as you can as well.

Did you have any PPI with it? - if so raise that if you feel you were mis-sold. Front loaded sometimes means any PPI was added to the loan amount and you pay for the PPI over the same term and rate.

In any event do not use these companies on the TV as you can do it all by yourself and YOU will get the full refund if applicable

Good luck

I work in finance and unfortunately you like many others have been shafted, when an agreement is front loaded it means the interested is added to the balance and you pay that off before any of the loan. This would have been stated in the terms and conditions and in the eyes of the law they finance company has done nothing wrong, they have fully explained this ( although they probably never but by you signing the agreement you agreed you fully understood the terms and conditions of the loan ).

I can only bring bad news and advise that its VERY VERY doubtful you will receive anything back, the FoS can't do anything because although in the eyes of the public is was unfair legally you signed and agreed you ready the terms. You were not mis-sold anything which is the current media bollux.

You were probably offered £200 as a gesture of goodwill simply because any case referred to HSBC through FoS HSCB will receive a £500 charge regardless if you win or not. FoS will charge companies £500 as a admin fee simply because they belive the company should have sorted the complaint out.

I work in finance and unfortunately you like many others have been shafted, when an agreement is front loaded it means the interested is added to the balance and you pay that off before any of the loan. This would have been stated in the terms and conditions and in the eyes of the law they finance company has done nothing wrong, they have fully explained this ( although they probably never but by you signing the agreement you agreed you fully understood the terms and conditions of the loan ).

I can only bring bad news and advise that its VERY VERY doubtful you will receive anything back, the FoS can't do anything because although in the eyes of the public is was unfair legally you signed and agreed you ready the terms. You were not mis-sold anything which is the current media bollux.

You were probably offered £200 as a gesture of goodwill simply because any case referred to HSBC through FoS HSCB will receive a £500 charge regardless if you win or not. FoS will charge companies £500 as a admin fee simply because they belive the company should have sorted the complaint out.

Ditto re working in finance and there is no harm in trying to get more than the £200 they have offered you.

Re "Front Loaded" it was only a few years ago that PPI selling was ok and if it was just media bollox do you think banks would be paying millions out ,so things need to be challenged to see if changes need to be made!!

Nothing ventured nothing gained - PS - I dont work for any major bank etc

I work in finance and unfortunately you like many others have been shafted, when an agreement is front loaded it means the interested is added to the balance and you pay that off before any of the loan. This would have been stated in the terms and conditions and in the eyes of the law they finance company has done nothing wrong, they have fully explained this ( although they probably never but by you signing the agreement you agreed you fully understood the terms and conditions of the loan ).

I can only bring bad news and advise that its VERY VERY doubtful you will receive anything back, the FoS can't do anything because although in the eyes of the public is was unfair legally you signed and agreed you ready the terms. You were not mis-sold anything which is the current media bollux.

You were probably offered £200 as a gesture of goodwill simply because any case referred to HSBC through FoS HSCB will receive a £500 charge regardless if you win or not. FoS will charge companies £500 as a admin fee simply because they belive the company should have sorted the complaint out.

My loan agreement says quite clearly interest will be paid over the whole term of the loan. Says nothing about front loading. I have the documentation. It has already gone to the Financial ombudsman service who have all the documentation.

I work in finance and unfortunately you like many others have been shafted, when an agreement is front loaded it means the interested is added to the balance and you pay that off before any of the loan. This would have been stated in the terms and conditions and in the eyes of the law they finance company has done nothing wrong, they have fully explained this ( although they probably never but by you signing the agreement you agreed you fully understood the terms and conditions of the loan ).

I can only bring bad news and advise that its VERY VERY doubtful you will receive anything back, the FoS can't do anything because although in the eyes of the public is was unfair legally you signed and agreed you ready the terms. You were not mis-sold anything which is the current media bollux.

You were probably offered £200 as a gesture of goodwill simply because any case referred to HSBC through FoS HSCB will receive a £500 charge regardless if you win or not. FoS will charge companies £500 as a admin fee simply because they belive the company should have sorted the complaint out.

My loan agreement says quite clearly interest will be paid over the whole term of the loan. Says nothing about front loading. I have the documentation. It has already gone to the Financial ombudsman service who have all the documentation.

If it already with the Financial Ombudsman then you will just need to be patient and await their verdict. However having worked in banking for 42 years I agree with the comments of Mardon89 above.

I thought it was true of most repayment loans and mortgages that at the start of the repayment you are paying a higher proportion of interest than at the end.

Using your figures and the ppmt function in excel I get the following figures for outstanding balance at the end of each of the 8 years

£22,554.52
£19,940.29
£17,145.69
£14,158.26
£10,964.69
£7,550.77
£3,901.29
£0.00

So in the first year you only pay off £2400 but in the last year you pay off nearly £4000. With 17 months to go the settlement figure would be near halfway between £7,550 and £3,901 which would be about £5,700.

Or am I misunderstanding the problem. This is why when you switch mortgage you need to reduce the term each time not stick to 25/30 years otherwise you are just paying lots of interest and nothing substantial off the balance.

Im no expert but when I had a similar question years ago "The Rule of 27" was quoted at me.

Im no expert but when I had a similar question years ago "The Rule of 27" was quoted at me.

What's the rule of 27?

I thought it was true of most repayment loans and mortgages that at the start of the repayment you are paying a higher proportion of interest than at the end.

Using your figures and the ppmt function in excel I get the following figures for outstanding balance at the end of each of the 8 years

£22,554.52
£19,940.29
£17,145.69
£14,158.26
£10,964.69
£7,550.77
£3,901.29
£0.00

So in the first year you only pay off £2400 but in the last year you pay off nearly £4000. With 17 months to go the settlement figure would be near halfway between £7,550 and £3,901 which would be about £5,700.

Or am I misunderstanding the problem. This is why when you switch mortgage you need to reduce the term each time not stick to 25/30 years otherwise you are just paying lots of interest and nothing substantial off the balance.

I think your misunderstanding, On a normal loan the interest is added as the front but your repayments reduce your balance and in turn your interest on the outstanding balance reduces hence reducing payments. A front loaded agreement means you pay off ONLY interest for however long it takes so for instance if your interest is £1000 and your repayments are £100 it will take ten months before you even start paying off the original loan amount. If you were to settle within the ten months you would be applicable for a interest rebate after the 10 months you get nothing because no interest rebate is due simply because you have paid it all off.

Im no expert but when I had a similar question years ago "The Rule of 27" was quoted at me.

Never Heard of The Rule Of 27 although I have heard of the rule of 78, which is different to front loaded agreements but I won't get into that one .