They can put notices in the papers about changes in the interest rate and it is your responsibility to pay for the loan at that rate. However, they cannot register a default and they should not add any penalties until after they have written to you about the changes and requested that the monthly payments are changed. If you have not changed the monthly payments, then it is possible that the term of the loan will increase beyond 84 months. In my opinion, it would be unreasonable if you are being asked to settle a large deficiency in a short time and you should consider asking that the term is increased instead but you should avoid taking out a new loan to settle things if possible.

We took a variable rate interest loan out for 84 months and is due to expire in Nov '12. I had a complaint with the provider who have answered the complaint but also advised that as we have not increased or decreased our payments over the whole of the loan in accordance with their base rate the loan wont actually be finished by the specified time so we now got to ring them and arrange to increase the payments to ensure it is finished at the agreed time
This is something we were not aware of and they say its our responsibility to increase payments when we see notices in either Daily Mirror, Daily Express or Independent.
Can they do this - this is causing us concern and dont know whether i can take it up further and argue my case?
any help would be greatly appreciated
thanks