Viewing 13 posts - 1 through 13 (of 13 total)
  • Loans and settlement offers
  • aero
    Free Member

    Hi all,

    I’m looking for some help re. credit and debt, and hoping Singletrack will be able to come to the rescue and advise as usual!

    I took out a professional loan some years ago with Metro Bank and, as per the terms of the loan, began paying installments on it in January 2021. Before this, Metro Bank sold my account to a debt company, Arrow Global.

    There is 3 years of installments left and I have never defaulted/missed a payment. This week I received a letter from Arrow Global with an offer to settle where if I maybe them a fixed amount in 90days they’ll close my account (saving me about £2,500 in loan repayments).

    I can’t see reasons not to take them up on this offer…

    The only thing I can possibly see being an issue is a sentence in the letter which says that if I take up this offer my account with be marked as “partially settled”. I’m concerned that this will look bad on my credit history – even though I would have settled their offer in full it potentially wouldn’t read that way?

    I also have to wonder what’s in it for them when I’ve always paid and they would eventually get the full amount.

    Any advice, thoughts or similar experiences would be very welcome!

    Thanks!

    dannybgoode
    Full Member

    This seems a little odd. The normal reason for debt co’s making offers like this is where a loan is in default and they are trying to recoup at least some of the outstanding debt.

    I would speak with your accountant or lawyer to be sure of any implications though as this would, on the surface at least, look to be putting an adverse mark on your credit record.

    Now, it may be that Arrow are just trying to tidy their book up and get some loans cleared down however this being the case and given you are not in default there is no reason they should mark the loan as only partially settled.

    Cougar
    Full Member

    Metro Bank sold my account to a debt company, Arrow Global

    Why?

    This sounds to me like you may have misread the repayment terms. You only started repaying a loan from “some years ago” last year?

    Companies like Arrow buy bad debts and send out threatening letters in the hope that you’ll pay up. If you do owe the money then that’s fine but I’d be concerned as to why it’s fallen to them in the first place.

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    frogstomp
    Full Member

    I also have to wonder what’s in it for them when I’ve always paid and they would eventually get the full amount.

    The settlement amount is likely to still be more than they paid the bank when they bought it from them, so they still make a profit (or at leas cover their costs).

    Experian suggest that it will be a mark on your credit history. How significant that is will probably depend on the rest of your file.

    dannybgoode
    Full Member

    This sounds to me like you may have misread the repayment terms. You only started repaying a loan from “some years ago” last year?

    Missed that bit – good point well raised. Yes, unless the bank folds (like NR did) then it is unusual for them to sell the debt to a collection agency…

    intheborders
    Free Member

    Sounds like they’re wanting to help their cash flow and/or Y/E results.

    I do deal with Arrow Global on a ‘professional’ basis, they’re pretty decent and no worse/better than their ‘peers’.

    I’d get a confirmation in writing, but FWIW many years ago I handed a car back which was on HP (wasn’t worth what we owed and once passed 2/3 in the contract if needed) and while the ‘partially satisfied’ was mentioned, never caused me an issue.

    Jakester
    Free Member

    This sounds to me like you may have misread the repayment terms. You only started repaying a loan from “some years ago” last year?

    Doesn’t look like it:

    I took out a professional loan some years ago with Metro Bank and, as per the terms of the loan, began paying installments on it in January 2021.

    Could be a loan with deferred payment?

    dannybgoode
    Full Member

    Could be a loan with deferred payment?

    Possibly but I have never come across any type of loan with a deferment period of several years except equity release type mortgages. Certainly not in the commercial arena…

    aero
    Free Member

    Thanks for responses guys.

    I called Metro Bank after the suggestion that I had misunderstood the terms of the loan and missed some payments. Apparently they no longer so professional study loans, and that’s why it moved to Arrow, and thankfully not due to any missed payments.

    Also regarding the deferred payment period, it’s because it was a professional study loan and only became payable once the course was complete 🙂

    Experian suggest that it will be a mark on your credit history. How significant that is will probably depend on the rest of your file

    Credit score currently showing as excellent on Experian, but due to renew on the mortgage in the next month so don’t want it to take a hit!

    Sounds like they’re wanting to help their cash flow and/or Y/E results

    Yea, could be this, would explain it coming out the blue.

    dannybgoode
    Full Member

    That makes more sense re: loan type :). I still think though if they are offering you the settlement for their own commercial reasons and not due to you defaulting they should not mark it down as partially settled.

    I would contact them and negotiate that point. If they want their loan book cleaned up they may well be able to do something.

    P-Jay
    Free Member

    Ah, it all sort of makes sense now.

    OP is in very unusual position. 99.9% of the time, the likes of Arrow Global would only buy defaulted loans for a few %, knowing that they’re more than likely not getting paid on them, but if they buy £1m worth of bad debt for £50k, they’ll get enough back to make a profit.

    They will often offer their ‘customers’ the chance to settle for less, because to them it’s still profitable, they do this for a few reasons 1) the settlement is higher than the cost of the loan to them = profit 2) they don’t think they’ll get paid anyway, so they’re roll the dice and see what happens 3) the loan is so old, or the paperwork is bad, or missing and it’s unenforceable (this happens a LOT when a lender goes bust).

    If OP decides to take the deal, and gets a ‘Partially settled’ marker it WILL have an effect on their creditworthiness, but I honestly wouldn’t even guess how much of an effect because most people who are offered this kind of deal, either have enough ‘bad news’ on their record that they couldn’t get a library card, or the loan is so old that it’s dropped of their credit file.

    Personally, as temping as it is, I probally wouldn’t take it, even if you’re going to save £2500, it could easily cost that in higher mortgage payments and other inconveniences over the 6 years it sits on your file.

    You ‘could’ call up Arrow Global and say “I’ll take the deal you’re offering, IF you don’t place the marker” but I’d guess either they’ll say “computer says no” or they’re legally bound to report it as such, which is sort of true.

    stumpyjon
    Full Member

    What they all say above plus factor in how you’re going to pay the loan off, unless you have cash sat about you’ll need to borrow, unless the interest rate you borrow at is significantly lower so that ongoing interest payments total a lot less than the £2500 you’re going to save it’s not worth it. Effectively you’re saving the interest by repaying the loan early, so not really a saving unless your financial circumstances have changed significantly since you took the loan out and you now have spare cash you didn’t at the start of your studies.

    tonyd
    Full Member

    I only ask this as the £2.5k in payments you’ll save is chunky so I would imagine the principle is pretty big…. Presumably you can afford to pay the settlement figure they are proposing in full, or will you need to take an alternative loan to make that payment? If you need to take another loan, how much will that cost you in interest over the repayment period?

    Edit: Cross post with stumpyjon – great minds!

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