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Customers Pay Exorbitant Loan Rates

Written By On 25/09/2013

FirstPlus, the Cardiff based lender owned by Barclays stopped lending back in 2008, but many borrowers of their loans are still reeling from the repercussions.

When the Bank of England increased the base rate by two per cent by up to five and three quarters per cent over a four year period a few years ago, FirstPlus chose to raise the loan rates to their customers accordingly. They told any customers who may have enquired about the rate hikes that it stated the reasons in clause seven of their secured loan contract.

However, when the interest fell to their lowest rates back in 2009, they were legally able to not drop their rates and continue to charge thousands of their customers exorbitant figures. Even clause seven could not help them! This is because their contracts were covered by the Consumer Credit Act which therefore prevents the City watchdog Financial Conduct Authority from getting involved.

That amounts to many of the people that took out secured homeowner loans with FirstPlus in good faith still paying over twelve per cent interest rates because of a loop hole in the system. Many of these borrowers now find themselves owing more on their property now than when they originally took out their loan all those years ago after paying fortunes extra in interest fees.

Because these are secured loans, if they do not keep up their repayments, then the bank has the law on it's side and are able to go in and repossess the properties, should they choose to.

Now that FirstPlus are no longer in existence, these borrowers have to speak with Barclays. The bank have only recently owned up to charging too much on interest rates and plans to give back one hundred million pounds to thousands of their customers who were charged unfairly. However, they insist that this does not include the FirstPlus loans in question.

The bank commented

We have complied with our obligations on statements. We have not applied excessive interest rates.

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