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Negative amortizing loan

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Household Finance Company

In 2005 our restaurant was in need of cash flow to fix aging tables, chairs and equipment. We received mail from Household Finance Co in the form of a 'check' where we just took this to a branch, sign it and receive the cash. Thinking we could pay it off soon, I signed the document. After one full year of on time payments, I noticed the principal only came down 20. After questioning HFC about this, they said that was the kind of loan it was. I tried to get them to redraft a loan to be paid off in 5 years, but they refused stating our credit was not good enough. We knew our credit got beaten up with the restaurant, but in their next breath, they said we could refinance our home and include the loan payoff in the refinance. I'm not the kind to sign documents that are misleading, but I really thought we could get out of this loan by now. After finally swallowing my pride I went to a financial advisor who 'red flagged' this loan and said it needed taken care of immediately as it was a negative amortizing loan. They said it would take more than 50 years to pay off and HFC would accumulate more than 630,000 interest and principal,on a 19,500 loan! Of course at this point I have bitter feelings with HFC and would highly advise the public to be very aware of any product they 'provide'. If anyone else has run into a situation like this I would like to hear about it. Also, if anything can be done about this I would like to know. Thank you.


Author:
Bill from Geneva, OH
Updated:
3/8/2008 3:44:42 PM
Created:
3/8/2008 3:44:42 PM
Topic:
Finance
Occurred In:
Mentor, Ohio
On Internet?:
Yes
Nationwide?:
Yes

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