loan rates gone berserk?

Question

Look at this message I got from CAHOOT, its a scandal and surely must be illegal

Your cahoot flexible loan interest rate. We have sent you an important email about your cahoot flexible loan account. Your flexible loan account interest rate has changed to 9.4% APR variable with effect from 6 December 2006 and 14.9% APR variable from 19 December 2006

This message is within cahoot.... it started at 5.9% can you believe and is now 14.9% absolute scandalous

This is from their T&C's

13.2 We may change our interest rates or our day to day charges at any time for one or
more of the following reasons:
a. To maintain the competitiveness of our business as a whole, taking into account
actual or expected changes in market conditions;
b. To reflect actual or expected changes in money market interest rates;
c. To ensure that our business is run prudently;
d. To reflect a change in general banking practice;
e. To reflect any regulatory requirements or guidance, or any change in the law or a
decision or recommendation by a court or Ombudsman;
f. To enable us to harmonise our banking or charging arrangements; or,
g. To reflect changes in technology or in the direct costs we are required to pay others,
or to take account of inflation.

As per last question I have done that, told them its a scam, they answer was as follows.... oh, ps: never missed a payment

Thank you for contacting cahoot in Coventry.

We have undertaken a significant review of the cahoot flexible loan account, part of this analysis looked at the rates on this account against the rest of the flexible loan market and the increased costs of a flexible loan account. The cost of lending money has increased not only because of the increases in the Bank of England rate but also because of the increased risk costs on a flexible loan account.

On a typical loan size of £3000 paid over 48 months, you will only pay around an extra £7.25 per month. We think the cahoot flexible loan account has some unique benefits that put you in control of your loan - take more money from your credit limit as and when you want and repay more without penalty. ...BLAH BLAH BLAH Oh, and cahoot dont offer this service anymore... they have ripped enough people off

Answer 1

sounds liek a scam to me especially since I looked over cahoots web site (England too not bad) I would fire off an email to my chaoot rep for explaination on this.

Answer 2

Seems a little odd as personal loans are usually fixed rate for the term of the loan. Check your loan agreement and see what it says. If its fixed for the term, then they cant do it.

Sorry. Didnt see the bit where you put "flexible" loan before. As its flexible and it says int theT & C's that they can change the rate at any time then it is legal, and you have signed the agreement making it binding. Your best bet is to get a FIXED rate loan from somewhere else (I'm with Egg who have been very good) and use this to pay off the Cahoot loan.

Answer 3

If you missed a payment - or series of payments then it is quite possible that they have changed the interest rate as a result? Maybe you could mention in the additional details whether this is the case or not. Something is certainly strange as in usual circumstances Cahoot wouldn't put up interest rates that sharply I don't think.

You could write to them and say how unfair it is and request that they change the interest rate back to a reasonable level.

Good luck sorting this out.

Answer 4

Flexible interest rates usually only vary when the Bank of England base rate changes, which it just has, -gone up by 1/4 percent. The second rise may be because a special rate offer has expired. You should check your original contract to see what the terms were originally.

Answer 5

I don't bank with Cahoot, but in 2006 Cahoot closed all new sales of credit cards, personal loans and mortgages and redirects all enquires to its parent bank, Abbey. (Source-Wikipedia) I suspect you are under new terms or someone is trying to defraud you... I recommend cutting all ties with them and going with a more stable/reputable bank. If you have outstanding loans, its OK... get a new loan from another institution and pay off this one... (assuming you can get better rates).

Answer 6

Not much I can say, But to advise that if you need a loan seek advice from a high street bank, and ask them one to one what your interest rates will be.

Although everything may be fine, I would never make financial arrangements over the Internet.

Go to your local bank, and talk to them, face to face.

If they can not offer you good terms, then try another.

Keep on trying.

Answer 7

I would move your account if at all possible. Interest rates look set to creep up a bit more yet.

You could even do a balance transfer to a credit card as a short term answer... there are still some low-rate deals to be had out there.

Answer 8

Firstly, is its origin genuine - it may be a scam message.
Secondly, check with the loan company, if its a scam, they'll possibly want to help; on the other hand tey may not want you to go elsewhere, so may re-negotiate.

Answer 9

just ignore or report the matter to the police