Finance House, Early Settlement, Interest Dispute.

I have just had an interesting but unfruitful conversation, with a Nephew,
2 years ago, he entered a 3 year loan for a new motorcycle

Having had some luck with Employment, he found that he could repay the loan early.

He went to repay the balance and found that, they will charge him, the full 3 years Interest.

Now in the UK and I guess, all of Europe, we would have an agreed, early settlement figure, on a sliding scale.
I have had a look at the paper work and I can see that, one one part it says so and on the other, side it does not say that the 3 years interest is payable. It just gives a Figure, of the Interest charged to the account.
Is this normal here in the PI, no matter what, the full amount of Interest is payable even if you can repay in a shorter time.
He asked me if I could lend him some money to offset this. I said I would make enquiries and get back to him.

They took the compound amount from him but have left the Interest, on account with, accruing interest, on that amount, This I find Unfair, he was already charged, with Interest, is it normal to charge again, Interest on Interest.

Thoughts advice comments please, fellow members.


JP

 

Well that is a disgraceful effort on behalf of the finance company , but why am I not surprised . Mostly the norm is always an early pay out fee , but at least the monkey is off your back . No more to offer on this Sorry JP .(just a thought) I could imagine though if your nephew was moving permanently overseas , that they would be a lot more accommodating in coming to a better agreement on tidying this up before said (never to be seen again) permanent departure .

 

My driver loan his Honda bike in DUEKSAM almost 2 years now and his paying 3k per month payable of 3 years plus interest if delayed. Now, because he has a good evaluation at work,and had 1 absent since 2 years.. i offered him to pay Cash on the remaining balance of his loan. I paid 34,500pesos last month instead of 59,000 that he has to pay until next year.
Now, my verbal agreement is; he will pay 2,500 every end of the month deducted from his salary which shall commence 3 days from now. :roll eyes:

 

I tried to pay off my car 3 year loan with BDO early and was not allowed to do it.

 

In this country, maybe people should be happy they could get something on debt at all.

 

I think it really depends on the finance company. I had my old car 2 years ago on a loan for 3 years (but bought it new) but i paid it off in just over a year and the bank (sterling) just recalculated for the interest up to that day im paying off the mortgage. I must say i dont think they overcharge me with the interest in the first place nor after i did my calculations i dont think that they charged me for 3 years worth of interest either. It all depends on your finance company.
Before you sign any loan agreement read the fine prints :-)

 

I had MANY Loans here (in Oz) and the norm was to pay it off and as you did so, the amount of Interest also lowered on what was owing, so the faster you paid it off the better it was for you, until my accident in '84 where my Mother approached the several Finance Companies I was dealing with to see who would offer the best deal on consolidating all of my Loans onto the one loan over a longer period so as to make it affordable for me to try and get back on my feet once out of Hospital...

The Teachers Credit Union threw out an offer which my Mother accepted, I was happy as it stated clearly that I was paying back on a "Flat 16% Rate" whereas other Companies at the time were asking 18% to 23% as the norm...

Once out of Hospital I bounced into making double or triple payments each month in the hope of wiping my debt... A few years into the loan I was curious as to the progress I was making so enquired as to how much I had knocked from my loan with the extra Payments... Zero. Zilch.. Not a Brass Razoo!!! WT#??

I was then informed the extra money I had been paying was being held in another Account until I had enough saved to pay out the Loan, I asked if any interest was being paid on MY money they were holding, "NOPE!" I asked IF I could take that money back out of their 'other Account'? "NOPE!" NOT HAPPY JAN!

Then they smugly informed me I was actually BEHIND in my Payments! Double WT#??? I was informed that my Loan repayments had increased since I had taken out my Loan... Triple WT#??? Yes; my Interest had risen from 16% to 23% and I asked HOW when I am on a FLAT 16% Interest Rate, WHY hadn't my Loan decreased since I had lowered what I had originally borrowed, AND the extra I had paid, HOW was this so?

Turned out; by my contract, I was not allowed to pay extra Payments than what amount was due, any extra paid they took until I had enough to pay out the Loan, if I paid the Loan out early, then I had to pay a Penalty for not Paying my Loan for the Full Term of the Contract, in the end I cashed in my MLC Term of Life Insurance Policy (that is a story for another day but never be so stupid to believe the lies told with these shams) and Paid the Loan out pronto to cut all ties with them...

I have NEVER had another Loan since despite having had the highest of high accreditations from other Borrowers who were offering me Loans to buy Property before my accident, the QTCU branded me with a Black mark for apparently not making my Payments on time, when reality was; I was not legally allowed to make the extra payments I had been making nor was I supposed to pay my Loan out early, for that I was penalised as not being a good Customer... O-| Never! Never! Never AGAIN!

 

Middle names for all!

The more I look into this the more I realise, that just about everyone I talk to of late, is covered in debt. Maybe, it is their middle name. why not Rename the RPI to Republic of the Credit Islands, seems no one can/will live without it. Finance Houses on just about, every corner, with Pawn Shops in between, Some people are surely, getting rich on others misfortunes. OK so whats new ?

 

Philippines is a terrible place to get a loan.. Too high the interest and gouge tactics and to think all targeted at the poorest borrowers.. Worldwide... At some point you cross the line of being a service into usury.. That line is way off in philippines...

I paid off all my debts finally this year and then jumped in and bought a rental house with four apartments in it.. They are all rented so i don't feel like i added debt by financing the house..It can pay its own loan and more through rents.. I had one past loan that was a flat total interest summed up with the principal.. It never changed the ratio of interest to principal and that ratio reflected in each months payment and i got to see the entire amount go down by what i paid monthly.. The total owed was the total interest over 7 tears plus the principal borrowed... That was the best loan... I had another one from Chase Manhattan entered over a decade ago that was a treadmill.. Paid only interest for years with no dent in the principal and then it graduated into the principal at a tiny pace until 10 years i had only paid down $1000 with $180 to $220 payments a month... If i didn't pay off early, i would be paying that $10k loan for 30 years and $60k or more to them...
Had a good mind to bail on them and never borrow again.. I pulled through thanks to living in 3rd world countries over 4 years and saving enough to pay off all my debts early. Only debt i have now is my home loan and that makes money for me to leave me above the red...
I learned to hate debt after recovering from the debt damage i did myself in the 90's and that lasted into 2012.. I don't even want to buy a car unless i have the full amount to pay, so i ride the bus until i have enough to get a new car with cash up front..

Saving money gets addictive too if you try... Cant imagine anymore why people would chose the other drug called DEBT..

 

Debt seen as a drug, how apt and so very true.

I had never thought of like that and yet, I guess that is what it is like, the more you borrow, the more you need to repay and the more you need to borrow, to repay, ever enlarging circle. but unfortunately, the PI is in that grip :(

As long as there is this, Wealth Divide, However caused, the spiral will continue. It is with No Doubt, a Crying Shame that a nation has to rely on Borrowing but it is a fact of life and becomes more apparent, when we discuss these things and Get more and more, differing Stories about the same issue. Loan Sharking is on the up, mainly because of defaulters, Brought about IMHO, by the finance houses themselves. Whilst "Money maybe does, make the world go round" it certainly is "the root of all evil"

I paid the interest Balance today and told My nephew, next time, read the contract BEFORE you sign it.

Thank You all, for the replies, they have opened my eyes, a lot wider



JP