# HFC Loan problem



## 20Legend (19 Jun 2007)

Hi,

I borrowed 7.5k last month from HFC bank. This is over 60 months with interest of 5k. So 12.5k is repayable (210 p/month).
I needed the money in a rush but i am now in a position to repay this loan in full. I called HFC to see how much i needed to send to them to clear it and the girl informed me i had to send over 12k. even though i only borrowed 7.5k.

Could someone confirm to me if this is correct. I believe the interest is calculated as "rule of 78". I expected i may have to pay an amount in excess of the principal but not the full interest payable over the course of the loan!

Thanks


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## ClubMan (19 Jun 2007)

What do the terms & conditions of the loan agreement say about how interest and any early redemption penalties that might apply are calculated?


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## 20Legend (19 Jun 2007)

Thanks for the reply. I'm just in work at the min so when i get home i'll have a look and let you know.

Cheers


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## irishpancake (19 Jun 2007)

I think HFC would be considered to be in the sub-prime category of lenders.

They have been mentioned in this AAM thread.

Just intrigued as to why you chose this particular lender, as opposed to Tesco or Halifax or NIB, or any other High Street Bank.

Probably shows why people should shop around and research before signing on the bottom line.


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## moneyhoney (19 Jun 2007)

20Legend said:


> Hi,
> 
> I borrowed 7.5k last month from HFC bank. This is over 60 months with interest of 5k. So 12.5k is repayable (210 p/month).
> I needed the money in a rush but i am now in a position to repay this loan in full. I called HFC to see how much i needed to send to them to clear it and the girl informed me i had to send over 12k. even though i only borrowed 7.5k.
> ...




Was the loan fixed rate or variable rate??


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## argolis (19 Jun 2007)

I had a loan from them through D.I.D. for a number of appliances. I can't remember the specifics, but at the time I checked the T&Cs (and also told by DID) that if it wasn't paid in full within a specified period I would be locked into fixed term repayments at a substantial interest rate.

I knew I would be in a position to pay shortly after so I was ok. This may be a case of caveat emptor? Check the T&Cs to start. Hope you get sorted out ok


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## River (19 Jun 2007)

20Legend said:


> Thanks for the reply. I'm just in work at the min so when i get home i'll have a look and let you know.
> 
> Cheers



I hope you don't have to repay full amount. 

I have used HFC before also for buying appliances. 12 months interest free period but if you went one day over the 12 months the full amount of interest, that would have been payable over the life of the loan (5 years), was due.


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## Thrifty1 (20 Jun 2007)

There ar 2 types of HFC loan being discussed here
1) is their retail HP agreement on goods in DID, Harvery Norman, etc, these are usually over 48 months with a 12 month interest free option (pay full amount in 12 months and no interest).
2) a personal loan from the "household" branches ,in Tallaght and Naas.

I would imagine it is a fixed rate if the rule of 78 applies. This is basically all the interest payable minus a 5% discount for early repayment, making the amount due if you wish to repay in full now about €12k.

HFC are sub prime lenders, they are very good for the retail HP loans as if you know you can clear the amount in full in the 6 or 12 month period you will get the loan interest free, however their personal loan rates are astromonical, you probably got it at about 22% just below the rate you need to register as a money lender!! (23%)


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## irishpancake (20 Jun 2007)

I actually never heard of this "rule of 78", so I researched it. 

Below is a screen cap from a Calculator where you can check out the Interest paid on this type of loan, and how much is payable in the event of early settlement. I used the OP's figures.

Bizarre is the word indeed.



[broken link removed]

Screen cap only shows first 5 months, but the link will give full payment schedule. 
Looks like the Interest rate is 13.60% (not sure if this is APR, but I doubt it).


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