Paragon Finance (1 Viewer)

[pappajohn]

hi,
when we bought our kontiki in june last year we took finance with paragon finance as a temp measure til my flat was sold.
now the flat is sold i rang paragon for a settlement figure:-

initial loan £28,500

interest over 10 yrs £17500

total repayment £46,000

fair enough..... 10yr loan!!!!!!!!!!!

settlement figure after 6months £40,600 :Angry:

£12,100 interest after 6 months.

i make that around 80% apr.

going to CAB tommorow but i dont know what the hell to do, cant afford to keep the loan for the full term and certainly cant afford to end it.

DONT USE PARAGON FOR YOUR NEXT MOTORHOME FINANCE

 

[2escapees]

This from there website:

Can I repay the loan early?
All loans from Paragon can be settled at any point during the term of the loan. However, you should not use long term loans as bridging loans or for short term needs. You will not (unless the loan has only a few months to run) be required to pay all of the interest due over the remaining term of the agreement.

If your loan is for more than £25,000 and you wish to redeem within the first 5 years, then an additional 6 months interest will be added to the balance at the time of redemption.

If your loan is for more than £25,000 and you wish to redeem between the 5th and 10th anniversary of the loan , then an additional 3 months interest will be added to the balance at the time of redemption. After 10 years there is no interest penalty for settling early.

If your loan is for up to £25,000 then your redemption figure will be calculated in accordance with regulations made under the Consumer Credit Act 1974 and the Consumer Credit (Early Settlement) Regulations 2004. Remember that the rule calculates a rebate on the total charge you would have paid over the full lifetime of the loan.

Obviously the CAB need to explain advise how to get them to implement what they say above. But at the end of the day money lenders are sharks!

 

[pappajohn]

Hi guys, i already found that and printed it off to take to CAB.:thumb:
i dont mind paying the 6 months interest but nearly all of it.............there having a laugh.

 

[pappajohn]

This from there website:

Can I repay the loan early?
All loans from Paragon can be settled at any point during the term of the loan. However, you should not use long term loans as bridging loans or for short term needs. You will not (unless the loan has only a few months to run) be required to pay all of the interest due over the remaining term of the agreement.

If your loan is for more than £25,000 and you wish to redeem within the first 5 years, then an additional 6 months interest will be added to the balance at the time of redemption.

If your loan is for more than £25,000 and you wish to redeem between the 5th and 10th anniversary of the loan , then an additional 3 months interest will be added to the balance at the time of redemption. After 10 years there is no interest penalty for settling early.

If your loan is for up to £25,000 then your redemption figure will be calculated in accordance with regulations made under the Consumer Credit Act 1974 and the Consumer Credit (Early Settlement) Regulations 2004. Remember that the rule calculates a rebate on the total charge you would have paid over the full lifetime of the loan.

Obviously the CAB need to explain advise how to get them to implement what they say above. But at the end of the day money lenders are sharks!

my wife has just pointed out the mistake they have made.(hopefully)
the top hi-lighted pragragh is the one that applies but the bottom one is the one they have used to calculate the rebate. God, please let me be right.

your last comment is an insult to sharks.

 

[pappajohn]

went to the CAB today and the good news is we may have been mis-sold finance on a technicality in law.:Angry:
solicitors next stop.

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[dylan]

Fingers and toes crossed for you

 

[Enodreven]

I Hope it works out for you,

But be very, very, careful unless you can get a no win no fee solicitor, as otherwise it could cost you a lot of money if you lose ?

As you have the money to repay the loan fully, Have you compared the interest you could get if you deposit the amount in a bond rather than pay the redemption fee, only i had a similar situation with Nationwide on a fixed interest only mortgage which we took out 2 years ago.

They wanted something like £2500 to settle it 2 years early so we put the same amount into a 2/3 year bond with SAGA and are actually getting £28 per month more than we are paying Nationwide so its worth looking around.

I really hope it works out for you,

went to the CAB today and the good news is we may have been mis-sold finance on a technicality in law.:Angry:
solicitors next stop.

 

[pappajohn]

I Hope it works out for you,

But be very, very, careful unless you can get a no win no fee solicitor, as otherwise it could cost you a lot of money if you lose ?

As you have the money to repay the loan fully, Have you compared the interest you could get if you deposit the amount in a bond rather than pay the redemption fee, only i had a similar situation with Nationwide on a fixed interest only mortgage which we took out 2 years ago.

They wanted something like £2500 to settle it 2 years early so we put the same amount into a 2/3 year bond with SAGA and are actually getting £28 per month more than we are paying Nationwide so its worth looking around.

I really hope it works out for you,

Hi Brian,

while i now have the funds to repay the loan i cant cover the robin hood factor as well. i cant afford to invest the cash i have as i would still have to make the normal payments as well. i expected something around the initial loan amount minus payments already made plus some interest as a penalty but they say the interest was calculated from day one and divided by the loan period accordingly.
it also transpires it is a HP loan, not a personal loan as we were told(my fault for not reading properlyoh but we were not given the statutory breakdown for early repayment at 1/4 - 1/2 - and 3/4 term as required by law. this is what the CAB picked up on.
if it must run full term then the £30k i do have will stay in the bank and earn some interest while being used for payments for the next six years til it runs out then take a private loan for the remainder.
the other problem is we cant sell it for 9 1/2 years without paying the full balance.

at least robin hood had the decency to wear a mask.

i have been well and truly bitten but never again. if i aint got the cash i wont buy the goods.
wonderful start to 2008:Angry:

 

[Peter JohnsCross MH]

This from there website:

Can I repay the loan early?
All loans from Paragon can be settled at any point during the term of the loan. However, you should not use long term loans as bridging loans or for short term needs. You will not (unless the loan has only a few months to run) be required to pay all of the interest due over the remaining term of the agreement.

If your loan is for more than £25,000 and you wish to redeem within the first 5 years, then an additional 6 months interest will be added to the balance at the time of redemption.

That reads to me that you pay the balance of the original loan (capital) plus a penalty interest of 6 months ie one twentieth of the total interest charge.

If it was under £25000, then the rule of 74 applies, which I can tell you when I get back home

Peter

 

[pappajohn]

That reads to me that you pay the balance of the original loan (capital) plus a penalty interest of 6 months ie one twentieth of the total interest charge.

If it was under £25000, then the rule of 74 applies, which I can tell you when I get back home

Peter

hi peter,
that's exactly as both i and the girl at the CAB read it but when she showed it to their legal man it turned out to be an HP agreement not a personal loan as i thought which come under differant rules.
i'm still considering weather we were mis-sold on the grounds of not being given 3 illustrations of early settlement at 1/4, 1/2, and 3/4 term.
it does state on their website that ALL our loans can be repaid as you interpret it but as brian said we could be in deep s**t if we lose any court case.
we're considering cutting our losses and taking a sensible loan for the extra £10k needed which will price the £28.500 m/home at around £55k in real terms, but the current loan will cost over £47k if it goes full term. at least we wont be stuck with it for the next 10 yrs and will be able to trade-in at a future date.
as i posted earlier, we have been well bitten and i will never buy on a dealers finance scheme again.

john.

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[Peter JohnsCross MH]

paragon

Hi John,

There is more to this than meets the eye and there are more ways of skinning a cat than one!

I have owned for many years a registered finance company (running it down now and not taking on any more business) so I am bit in the know.

Please call me on 07831-301170, mobile I am afraid as I am on my boat and won't be back home until Tuesday, and my internet speed at the marina is dismal!

Regards

Peter

 

[Rapide561]

Mis sold

Hi

Proving that the product was mis sold is not the easiest thing to do, but it possible.

Can I just say that, if you leave the £25,000 in a decent bank account, for instance paying 5% nett, your £28500 will be worth £46423.50 assuming interest rates remained constant.

If you look at www.thisismoney.co.uk and www.moneysavingexpert.com there are sample letters on there.

Russell x

 

[pappajohn]

Hi

Proving that the product was mis sold is not the easiest thing to do, but it possible.

Can I just say that, if you leave the £25,000 in a decent bank account, for instance paying 5% nett, your £28500 will be worth £46423.50 assuming interest rates remained constant.

If you look at www.thisismoney.co.uk and www.moneysavingexpert.com there are sample letters on there.

Russell x

thanks for the advice russell.
if you look again at post #8 you will see the problem.
unless you know of an account that will pay £388 pm interest.

john.

 

[pappajohn]

Hi John,

There is more to this than meets the eye and there are more ways of skinning a cat than one!

I have owned for many years a registered finance company (running it down now and not taking on any more business) so I am bit in the know.

Please call me on 07831-301170, mobile I am afraid as I am on my boat and won't be back home until Tuesday, and my internet speed at the marina is dismal!

Regards

Peter

cheers peter,
i,ll call tomorrow night.
any advice will help.
john.

 

[nannybarbie]

We got caught the same way with our first van. We borrowed £26,000 and after making payments for 4 years we had to pay £28,000 to clear it off. It wasn't Paragon, I think it was Black Horse so it seems to be a very common problem.

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[cabby]

as a matter of interest which dealer did you buy from and was it them that advised you on the finance.

cabby

 

[C.L.S]

I was told recently by 2 different dealers that this ( legalised theft ) practise is due to change in April of this year when new rules governing loans over £25000 come into force. And apparently they will cover loans / agreements taken out before this date. Might be worth waiting till after April to see if correct

 

[camcondor]

hi peter,
at least we wont be stuck with it for the next 10 yrs and will be able to trade-in at a future date.
as i posted earlier, we have been well bitten and i will never buy on a dealers finance scheme again.

john.

Pappajohn, from experience I can say that you CAN indeed trade your motorhome in before the finance agreement is up - dealers are always able to settle with the finance companies in order to sell you something else. We did this with our last motorhome - traded in for the Adria, even though we had only had the motorhome (a Ravenna) for a year at that stage. The sales person when we bought our first m/h on a 10 year finance plan told us that people tended to trade in on average 18 months- 3 years after taking the initial 10 year loan. It does tend to tie one to dealer trade ins as they obviously get special arrangements with the finance companies but you certainly can change your van without as much of a punitive loss as settling direct with the company, this way, years and years before the 10 year arrangement was up. We lost very little on the Ravenna this way as the dealer wanted to move a more expensive MH.

It is the most awful way to have to buy a MH mind you, and I would have done it any other way if I'd had the cash that most MHome owners seem to have....:Sad:

Hope you can get a better settlement arrangement by talking to a dealer in the know / someone who is clued up with these financial arrangements.

Laurie:thumb:

 

[Peter JohnsCross MH]

Hi Laurie,

That only works if you buy another MH and take out a new agreement with the original finance company generally as they are not losing any business by the change and keeping the customer.

On all early settlements, the finance company is entitled to charge a settlement fee as basically they have contracted out that amount of money for an agreed period of time and have calculated the total interest receivable into their profits and paid commission accordingly.

Depending on the agreement if its under £25000-00 loan, then it comes under the rule of 74 which is a scale fee depending on how long the loan has run and then discounts the original charges and allows a rebate for early settlement.

Over £25000-00 I am not sure at this stage, but I see absolutely no reason for the astronomic figure that he has been quoted and I am fairly sure that the FSA would have something to say about it as its basically usury. It it was me, I would apply the rule of 74.

As I said before I don't know the rule of 74 off the top of my head but I have it at home and will check the figures on Tuesday.

It is invariably cheaper to arrange a bank loan than use a finance company, but then you dont have the 'fall back' of going to your bank should you need further finance for say home improvements.

The cheapest and best way to borrow money is through your mortage, its at a lower rate than a finance company, personal loan or overdraft at the bank and it doesnt affect your credit rating by extra searches on you. It wont get you a better deal though by shouting I am paying CASH as the dealer would rather sell you finance and earn commission!!!

Regards

 

[pappajohn]

We got caught the same way with our first van. We borrowed £26,000 and after making payments for 4 years we had to pay £28,000 to clear it off. It wasn't Paragon, I think it was Black Horse so it seems to be a very common problem.

blackhorse (and carcraft) is another i have had a problem with but entirely my fault for not reading the agreement properly. i asked for a 3year loan and arthur daily signed me up for 5years!.
john

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[woodyold]

The very best of luck mate , were all rooting for you...............Ron.

 

[pappajohn]

as a matter of interest which dealer did you buy from and was it them that advised you on the finance.

cabby

hi cabby.
the van was bought from cleveland motorhomes and i cant recommend them enough.:thumb::thumb:
they arranged the finance but i dont hold them responsible as they use a local agent by the name RESTALLS. these are the people i blame:Angry: although i will be informing cleveland m/hs of the problem and see what they have to say.

john.

 

[Don Madge]

I've been following this thread very closely as I worked as an advisor at the CAB for 13 years. That was quite a few years ago and I won't give any advice except to say I would not touch the HP with a "barge pole".

A personal unsecured loan is much safer to have, the motorhome is yours from day one and if you default on the payments you have far less problems. The dealers won't mention an unsecured loan as they won't get their commission from the HP company.

Also you have the advantage of having cash in hand to negotiate discounts etc.

Brfore you consider taking a loan/HP check this site Link Removed for quotes.

John I hope you get sorted OK.

Regards

Don

 

[camcondor]

I reckon dealers obviously want to sell as many vans as they can, whether this is by customers using finance houses, paying cash - whatever. How the customer obtains finance is the customers choice, in the end.

When we changed our van we did NOT have to stay with the same finance company, BTW - I told the dealer the only way I would be able to buy new was if he arranged to settle the finance on the old van and he did so, exactly the same as trading in a car before the finance agreement is up. Dealers obviously have some sort of arrangement with the finance houses to do this without loss to themselves. We ended up changing from Capital Bank to Paragon when we changed vans.

All the HP comapnies/ finance houses operate in a similar manner - it is probably the worst way to obtain finance, but for some of us, the only way we can buy a MH.

Don, personal unsecured loans may be the best, but given the price of many new motorhomes, I think you'd struggle to find a bank that will cheerfully hand over £50 000 + on an unsecured basis; most unsecured loan offers are for up to £25K only. Secured loans and mortgage increases to fund your motorhome purchase- well, I would certainly take the greatest care with that as you may face the possibility of losing your home if you default on the payments for whatever reason - illness, redundancy etc etc!!!

There isn't a perfect solution by any means, and I think many of these financing companies sail close to the wind with the Usury regulations. Best of all is just to pay for what you can and if you don't have the available capital, do without, as many of our grandparents would have said!!! For me, life's too short to die without having anything I really want or enjoy, hence taking on these finance agreements, but you certainly have to have eyes all round when signing for them. :Sad:

Restalls I think is a broker who dealers use as a single contact to find finance for customers, so they don't have to do the legwork themselves. Another one wanting a slice of the pie>>>>:Sad:

 

[Peter JohnsCross MH]

Strange that Cleveland use a broker to arrange finance, we certainly dont, (not knocking Cleveland in any way)

Be interesting to see what sort of settlement you get if you want to change Laurie now that you are with Paragon.

Having done a bit of research it would seem that these sharks can charge what they like on a settlement unfortunateley. However on presentation of the documents for signing you should have been given full details of the terms and conditions as regards settlement for you to read and understand.

If you were not given them at the time you have a case for miss selling.

It would be interesting to see what sort of settlement Cleveland can get from Paragon, ask them to obtain one for you as you are thinking of "upgrading"

It would also be worth checking with CAB again to see if there is retrospective leglisation in the pipeline to regulate agreements over £25000 and if so, just keep paying the agreement and go for the jugular at the appropriate time!

I apologise if I got your hopes up originally, I still am of the opinion that you have a case for miss selling especially with the terms quoted on their website as of course you read those before taking up the offer, didnt you.

Get it in writing and then if its better..... just pay it off!!!!!

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[RuthRv]

hi,
when we bought our kontiki in june last year we took finance with paragon finance as a temp measure til my flat was sold.
now the flat is sold i rang paragon for a settlement figure:-

initial loan £28,500

interest over 10 yrs £17500

total repayment £46,000

fair enough..... 10yr loan!!!!!!!!!!!

settlement figure after 6months £40,600 :Angry:


£12,100 interest after 6 months.

i make that around 80% apr.

going to CAB tommorow but i dont know what the hell to do, cant afford to keep the loan for the full term and certainly cant afford to end it.

DONT USE PARAGON FOR YOUR NEXT MOTORHOME FINANCE

if you require an unsecured loan then try moneyback bank they are associated with alliance and leicester but the interest rate is cheaper through moneyback bank I know that this does not help you now but for the future, I personally would let them take me to court and let the court decide there interest rates are unbelieveable i wish you the best of luck ruth

 

[pappajohn]

thanks to all who gave advice and sympathy

peter, sorry i forgot to ring you but looking at your last post you have helped a lot.
i will go back to CAB and ask about future legislation and what it may include.
i may be biased but i agree about the lack of info regarding early settlement making a case for mis-selling.
BUT i'm sure it will cost me more than 10k if i lose and they are awarded costs.:Angry:

cheers

john.

 

[Peter JohnsCross MH]

thanks to all who gave advice and sympathy

peter, sorry i forgot to ring you but looking at your last post you have helped a lot.
i will go back to CAB and ask about future legislation and what it may include.
i may be biased but i agree about the lack of info regarding early settlement making a case for mis-selling.
BUT i'm sure it will cost me more than 10k if i lose and they are awarded costs.:Angry:

cheers

john.

John,

When you go to CAB ask them about that finance broker Reestalls, as a broker I believe they have to be registered with the FSA (Financial Services Authority) and there are quite complex rules about advising members of the public about finance which they may not have followed.

You could also contact Trading Standards, they may take an interest as well and if they do it will cost you nothing, I wouldnt mind betting they have a file on Paragon aka I think National Home Loans.

Watchdog might also be interested, seems they have had a programme on them!!

 

[Terry]

Hi not sure if this would work/ but here goes, trade your van in for a newer mod but not much difference in price(whatever you fancy)get them to settle finance! take out more finance as needed, then it is my understanding you have seven days to cancel loan/pay it off??? you have newer van with none of the fiancé and less hassle? as said not 100% sure but needs checking as there is some law about you inviting into your home (no cooling off) or on there premises?you will have to be as cunning as them.Donning tin hat now
terry

 

[jakeontour]

Rule of 78

For anyone that's interested or confused by mention of the Rule of 78 (not 74, sorry J-C-M) I can give you what is hopefully a simple explanation of what it is and how a loan / hp deal works.

The rule of 78 is the method used by the financial industry to calculate early settlement figures, a calculation that has been around for decades and accepted by financial regulators the world over.

However there are two potential pitfalls.

Firstly you need to understand that interest payable is simply a factor of rate, amount and period. Period (time) is the crucial factor here.

Any flat rate loan works on the same basis, whatever it's called. If you want to borrow £1000 over 1 year at 5% flat you pay £50 interest. Over 2 years you pay £100, etc. So on a ten year loan you pay £500. This gives an approximate APR of double the flat rate less 1/2%, so 9.5%, although the APR has to include fees so is usually greater.

That is then added to the capital sum and the total amount divided by the number of months in the period. So in the example £1000 loan + £50 interest = £1050 / 12 = £87.50 pm repayment.

If you want to settle after say 3 months the Rule of 78 calculation works like this:
Each month of the period of the loan is given a numerical value in reverse order. So for a 1 year load month = 12, month 2 =11, month 3 = 10 and so on. If you add 12+11+10 etc they total 78, hence rule of 78.

So in the example settlement after 3 months means that the borrower is liable for 12+11+10 = 33 / 78ths of the total interest = £21.15.

That is added to the original loan then the amounts paid are deducted to give a settlement figure. In the example £1000 + £21.15 - (3 x £87.50) = £758.65

So far so fair to both parties. However we now come to the two pitfalls:

Firstly, most if not all deals carry a penalty clause stipulating that the lender can apply an adjustment to the number of months used in Rule of 78 calculation. Typically for a 'high street' lender this is a 3 month penalty. This is to allow the lender to recoup the costs of setting up and early terminating the loan. Contrary to what may be thought, these are processes that involve paid employees that take time. Also a small lender wil have matched your fixed rate deal with a similar term money market deal, and unwinding that costs money. So a reasonable (and that's the key word) penalty is regarded as fair.

The second pitfall happens when a borrower wants to early settle a long term loan. The rule of 78 calculation is still the same, but obviously the figures are greater as you start at 120+119+118 etc, so the impact is greater.

10 year hp deals appear to offer an 'easy' way to afford that nice new expensive van. Whether they are prudent is another matter.

As a general guide fixed rate deals, be they hp or personal loan, (and I can explain the differenece if anyone is interested) are fine if you intend keeping the item you are buying for the majority of the period of the loan as the penalty element is of little consequence in the last few months of the agreement.

If you know you only want a bringing facility you should get a variable loan. These are rarely available for private individuals from dealers so look to your bank. However interest is usually charged and payable monthly so a greater monthly cost.

What you must never ever do is take a loan secured by a charge your home however attractive it seems!

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