A promissory note

A Kentish man called with an anonymous tip. Be very careful when you take on a lease agreement. He needed some funds three years ago and went to a broker, Nationwide Corporate Finance, who very quickly arranged to raise £20K for him through the reputable Channel Islands bank Close Business Finance.

He said that he was told repayment would be 36 payments of £996 + Vat which he thought was a fairly good, tax-efficient deal. The loan would be secured on his existing equipment (three fridges, an air-con unit and epos on three tills).

Last November he told me: “I paid off the £36K last month. Now I’ve got a letter saying I owe another £6K to keep my own equipment. It’s a secondary hire and the broker owns the equipment.”

He wasn’t expecting this. Seven years ago, he had raised £160K through Lombard Leasing. “And they charged me 50 quid at the end to transfer the title.”

He went to a solicitor who said you’ll have to pay, but also pointed to a three months’ notice clause so he went back to the broker and negotiated to pay it in three instalments of £1,000 a month. The company agreed so he got the sum reduced by 50%.

The story has taken so long because we had to wait for the three months to pass and then for him finally to receive the title to his equipment back in writing. This took until mid-summer.

His advice: “You must find out what the final fee is, in writing, before you sign.”