Bank of Ireland - Car loan

My wife (before we were married) took out a car loan in 2004 for €12,000 over 5 years. She tends to neglect financial matters but after a year of nagging I have got her to get me a statement. I assumed it was fixed interest loan as the monthly payments have remained unchanged since inception (she can't find the original loan agreement, but has asked for a copy). On receipt of the copy loan statements last week, it appears it is a variable interest loan (the rate obviously having increased significantly over the last two years). BOI have not however increased the repayments, I asked my wife to call them to ask them to increase the repayments accordingly to bring the loan back to the agreed term of 5 years. BOI have told her that they will not do this as it alters the terms of the loan. Is this correct? If it is she will paying the loan over a longer term and paying interest (on the interest). I would assume that this loan should work like a mortgage i.e. interest rates go up, repayment goes up!

To change the payment schedule, a new loan - with a new agreement - would need to be set up.
If, as you say, the rate is variable, she may pay extra into it at any time. She also has the option of setting up an extra s/o, on top of her existing one, to pay the loan off more quickly.
I'm sorry they weren't more helpful in explaining the options open to her.

I can't really understand this-a rate change applied to the loan account would automatically change the payment schedule-I would have thought the the loan agreement would have allowed for the lender to vary the payments with notice.

Of course, if this is a hire purchase agreement as opposed to a loan, then the terms may be different.

I would be interested to hear more.

I've heard this many times before from boi and my wife used to work there and said it caused many arguments with customers.

Basically when the rates change boi didn't change the repayment amount and continue until the end of the agreed term. At this stage they calculate a balance and request a last payment that month. When the rates change this means the last payment is a lot higher than usual to offset the fact that for months the payment was lower than required.

The same happens if the rate decreases. The payments don't change and the customer is owed back money which often takes them a few months to process.

She is getting back onto BOI today. They were less than helpful yesterday, informing her she cannot change the loan repayments or make additional payments. The only option they gave her is take out a new loan to replace this one.

She's very independant but has agreed to let me clear the loan if BOI don't play ball and let her increase the repayments. I hope they will let her clear the loan if not without any penalties!

I can't believe BOI do this. It smacks of a money lender as they are effectively charging interest on the additonal interest and compounding the loan.

Will post an update when I have one. Thanks.