Public Finance Loan sucks us! seeking advice

In September 2009 my wife signed a HK$190,000 personal loan with Public Finance: the agreement was HK$7,696 for 36 months.

The whole amount with interest was: HK$277,056.

For sure not the best "deal" but anyway it is what she was able to obtain.


She paid her monthly fee for the first 10 months, than she lost her job and no savings.

She was not able to pay for 8 months in a row.

In march 2011 she asked how much was the outstanding.

They said 199,921.

It means she paid already HK$77,135 (or probably more if we don't consider the interests of the outstanding monthly fees).

Anyway more or less it was close to the interests amount of the original 190K capital.


In March 2011 she found new job and, in one year, she was able to pay HK$25,392.

The job finished in December 2011.

Unemployed again for 5 months.


In May 2012 she found a new job and she started paying back again some money (HK$43,500 from June 2012 to March 2013).


Collecting all the transfer she made I can say she paid back HK$146,027.

So from the original amount she is still missing HK$131,029.


From the contract she signed in 2009 the loan should have been totally settled within September 2012.

6 months ago.


I do not have any emergency savings to use to pay a possible balance as we got married few months ago.


Last week I suggested her to call the bank and try to renegotiate the contract.


This is the main point: they ask HK$336,000.


So:


in 2009 she asked for HK$190,000

till today 2013 she paid back HK$146,027

the outstanding balance today is is HK$336,000


The global request is to pay HK$482,027 for her borrowing of HK$190,000!

Looks like the 250%.


Now I can admit she didn't manage well her contract (actually very bad) and she was a bit unlucky from a working point of view but this final amount is very far from what I thought.


On the other hand I don't want her/us to have a bad credit record in case we want to buy one house in the future, here or in Italy where I'm from.


Here the question.

Do you think there is any way to bargain to a more reasonable amount?


Let's say around HK$170,000.

In this way if we pay HK$4500 for 36 months we can close this chapter.


I will be grateful for all the suggestions.

This is obviously a very bad situation. Many of these non banking instituations are basically loan sharks, with interest rates near zero on the market, they can charge north of 20% or more, were you that desperate for finance to have taken this step?? Just because you could doesn't mean you should. I presume you borrowed from UA, Promise or that other loan shark that has celebrities advertising for them on TVB all the time.


The solution here is simple, pay off the outstanding principal completely, if you have a property,

doing a refinance to obtain a lump sum would be one way and a good one at that because you can refinance on a longer term and at ultra low rates. If not then perhaps you may have to seek help from loved ones, not ideal but the longer you delay, the quicker it will consume you like a cancer. I wish you all the best.

Thanks Itse for your suggestion.

My wife borrowed directly in a branch of Public Finance in Queen street (Central).


Actually we don't have any property to use as a warranty for a refinance (by the way: which bank do you think can offer the best rate?).


I was thinking me too to offer a lump sum: do you think I can have space to bargain on this amount? I mean between what they want and what I'm really be able to pay for my wife?

I am no legal expert and it is difficult to comment without seeing the actual loan document, but if I were in your shoes and wanted to bargain I would consider something like the following:


0) find others with similar experience of defaults or late payments to this or other HK lenders and see how they dealt with it.

1) find someone who is familiar with, and can explain, financial contracts

2) read and understand the loan contract completely, especially the part relating to late repayment and default.

3) try and figure out how the demanded amount links back to the contract(how much is interest, repayment, cost, etc) and if these amounts are reasonable

4) read and understand the HK money lenders ordinance, code of banking practice, banking ordinace etc, to see if their contract and actions are in line with these

5) consider getting advice from a lawyer before contacting the lender

6) depending on the lawyers advice, if the figure they have demanded is not in line with the contract or ordinace and/or unreasonable, consider sending them a letter with confirmed delivery stating an alternative repayment schedule and why this is reasonable, if possible based on the original contract, and proceed to follow this schedule.


Just my 2 cents, good luck.

Thank all for the suggestion.

We spoke with the manager assisted by a lawyer and we closed the whole story with 150K (a friend helped us with the cash).

Good ending :-)