Em in Colorado reports: “I willingly took out a personal loan with HSBC in May of 2005. The original amount being $6000.00. The interest rate was high at 22.031%, but at the time I needed the money and had the ability to make the $165.00 payments. For 30 months I have paid $185 (yes $20.00 more than required every month) on this loan and recently paid it off. I was shocked to hear that my payoff amount was actually higher than the original amount! They wanted $6625 to pay off a $6000 loan AFTER making 30 months of on-time payments!
I let my accountant look over the loan paperwork and try to figure out how this balance actually went up in almost 3 years. Even if this was an interest only loan, the payoff would only be $4489. This is not an interest only loan and HSBC acknowledges this. They claim that they use a very complicated interest calculation procedure to explain the inflated balance. On a simple 22.031% APR (which is exactly what my loan paperwork says) My payoff should have only been $3798.90.
This bothers me to no end. There is no method of calculation on Earth that could make my payoff that high after 30 months of payments. An interest only loan would have saved me $2100.00!!!!
Apparently their “complicated way of calculating interest” exceeds all reasonable math beyond the comprehension of professionals that do this for a living. My accountant showed me several amoritization schedules that show they either charge 50% interest on a simple APR or about half of your payment goes into someone’s pocket and never gets applied to your loan.
The best part of this is: I still have my original loan paperwork and THEY highlighted the interest rate, payment terms, etc. They make no mention of a complex interest rate or any other tricks, yet feel they owe me no explanation.
While this is a dispute of only a few thousand dollars, I have every intention of pursuing them to all lengths.”
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