Hi all. In December last year, my partner (Jake) was approached by his brother (David), who asked if he would be a guarantor for him to get a loan. David had been ill and missed work, leaving him unable to pay bills and in debt. He said that he only needed to borrow £1000 or so, that the loan was low interest, that he was certain he'd have no problem repaying it, and that being a guarantor was more or less a formality and he would never actually have to do anything.
I'm sure reading this the financially experienced among you are already horrified, but my partner trusts his brother and believed him when he said the above. David has a toddler who Jake adores, and considering the circumstances, I don't think he felt he had a choice anyway.
The company spoke to my partner to assess whether he would be a suitable guarantor, and he was approved (which surprised me, considering his income was also very low). My partner's been getting texts and letters through from the loan company with updates since then, usually letting him know when the monthly due date has been moved back a few days. Not ideal, but nothing significant. This month, he's been receiving messages that the loan has gone into arrears. My partner rang his brother to check everything was okay, and he said there was nothing to worry about, he had just been busy and hadn't got around to paying it yet. That was three days ago, but when I saw he'd received another message today I said he needed to look into it properly. The monthly repayment was due on September 10th, and if it is not paid by the 17th (tomorrow), it will be reported to the Credit Reference Agency. If it is not paid soon, they will take the money from Jake automatically. Money he doesn't have.
Unfortunately that isn't all. I looked on the account, and the debt did not start at £1000 - it started at £3250, as the agreement also included settling another old debt of over £2000, something that was not mentioned to my partner by either David or the company at any point. I don't know if it was in the paperwork somewhere. As for 'low interest', the loan is 49.9% APR. The term is 60 months, and the monthly repayments are £128.46. The total amount repaid should be around £7700 after 60 months.
I have taken a screenshot of the statement history because to be honest, I can't get my head around it and this is stressing me out. You can see the full history here: http://ift.tt/2yeFq5p
From what I can see, he has been paying the £128 each month, but the interest is around £95-£100 every month. It has been 10 months and the balance has only decreased by £157.
I'm really upset and annoyed that Jake's brother misled him like this. I'm sure there will be some people who immediately say that it was stupid to agree to it without really knowing what he was getting into (which to be honest, it was), but I didn't expect this.
Looking at how much has been paid off so far, I am concerned that (at the rate it's decreasing) it isn't going to be paid off. Logically I know that as it is gradually paid off, the interest added will get smaller and the repayments will have more of an effect, but the date changing and such has me concerned, and I can't figure out how everything is being calculated. Can anyone help me get my head around the loan and how this all works? Am I wrong in thinking that the loan is not on track to being paid off? Is there a better way of handling this situation? Is there anything my partner can do here?
Any help or insights would be appreciated. Massive thanks in advance.
Submitted September 16, 2017 at 11:45AM by TigerWambams http://ift.tt/2wjSclV
