Swift Advances/Ocean finance

[meellis]

Re: Swift Advances/Ocean finance

APR

Lastly I better mention the TCC in relation to the APR quoted on the agreement.
The perceived cost the loan can be calculated by using;
The amount you loaned,
The time taken to repay it and
The amount of interest you pay
This would give you the interest quoted in the agreement, however this would not include the total cost of the loan as it would leave out all the other charges that you have had to pay in order to get it.
The APR calculates its value by using the TCC instead of just the interest thus including all the charges and giving a truer picture of what the loan actually costs you

This is a quote from Andy's own link on this thread notice it states "giving a truer picture of what the loan actually costs you".
This is my take on quoted interest rates because I know it is a complex subject, all products have their interest calculated from a derivative of the nominal rate of interest quoted. This derivative is quoted as 1.31% monthly on the agreement because the frequency is monthly. This gives an annual nominal rate of 15.72% (12x1.31). Because the nominal rate doesn't show the un-educated dirty debtor the effects of costs, charges and other terms like compounding it was decided to show a comparative rate on agreements so we could judge the true cost to us and judge which product was the fairest, because these companies are well known for dressing a product up better than it is. This rate is the APR or annual percentage rate, the key word being annual because it is supposed to illustrate the true cost over a year for comparison purposes not calculation. From the three examples I posted it shows this,
In the first you have borrowed and received £8000 at 1.31% a month with no costs (as per the agreement) so all you pay back if you stick to the agreement is 120 months at £132.67 which is 15.72%.
On the second you have borrowed £8000 but only received £7660 because the rest went to the costs. Because the full £8000 is accounted for at 1.31% the payments are still the same as the first example but you are paying the same for only receiving £7660 so the APR is calculated to incorporate the costs. What the APR is showing you is that this deal is the same as borrowing £7660 at 16.89% a year (annually).
The third example you have borrowed £8359 and received £8000 (favoured way of Swift). Because the full £8359 is accounted for at 1.31% the payments have gone higher then the first example but you still only received £8000 yourself so with the APR calculated this deal is the same as borrowing £8000 at 16.91% annually.
This is why it is easy to confuse the interest paid or charged with the APR because the APR is only an indicator of the costs over a year.

[Guest]

Re: Swift Advances/Ocean finance

APR

Lastly I better mention the TCC in relation to the APR quoted on the agreement.
The perceived cost the loan can be calculated by using;
The amount you loaned,
The time taken to repay it and
The amount of interest you pay
This would give you the interest quoted in the agreement, however this would not include the total cost of the loan as it would leave out all the other charges that you have had to pay in order to get it.
The APR calculates its value by using the TCC instead of just the interest thus including all the charges and giving a truer picture of what the loan actually costs you

In the first you have borrowed and received £8000 at 1.31% a month with no costs (as per the agreement) so all you pay back if you stick to the agreement is 120 months at £132.67 which is 15.72%. The interest paid would be £7914 which would actually give an annual flat rate of 9.8%

On the second you have borrowed £8000 but only received £7660 because the rest went to the costs. If you did not receive the full amount of credit as itemized on the agreement it would be improperly executed and unenforceable.
Because the full £8000 is accounted for at 1.31% the payments are still the same as the first example but you are paying the same for only receiving £7660 so the APR is calculated to incorporate the costs. What the APR is showing you is that this deal is the same as borrowing £7660 at 16.89% a year (annually).
The third example you have borrowed £8359 and received £8000 (favoured way of Swift). Because the full £8359 is accounted for at 1.31% the payments have gone higher then the first example but you still only received £8000 yourself so with the APR calculated this deal is the same as borrowing £8000 at 16.91% annually.
This is why it is easy to confuse the interest paid or charged with the APR because the APR is only an indicator of the costs over a year.

The APR gives the situation regarding the agreement, the interest that is applied to the account is part of the ongoing relationship if this continues after the contractual period the APR no longer applies to the contract, it cannot because the APR calculation depends on how long the agreement goes on for and how quickly the loan re-payed.

[meellis]

Re: Swift Advances/Ocean finance

Firstly my description was incorrect, I meant that the interest charged through the term of the agreement would be 1.31% or 15.72% annually. As you posted earlier the balance would be reducing hence when you work backwards you get a flat rate of 9.8% because the 1.31% would be calculated against decreasing capital, 9.8% would be the average across the whole term.

Secondly you are credited the whole £8000 but you only receive £7660 because £340 has been used to pay your costs so you are paying for the whole £8000 but only receiving £7660 in your pocket as it were. What the APR is designed to inform the consumer is that this deal is the equivalent of borrowing £7660 at 16.89% so you might be better off trying to find a loan that gives you £7660 without the costs and at a lower rate than 16.89% because you will be better off. This is why the APR on payday loans is quoted so high because it takes into account all the charges and fees that can be charged if you have the balance over a year when the facility is only supposed to be short term ie days. It is designed to inform the consumer that it is very expensive because of clauses hidden in the terms and conditions without the consumer having to trawl through the small print.
Andy I am not going to question your extreme knowledge on the subject, even though you have not admitted it it is abundantly clear that you are or have been a professional in this area at some point so I will let people read my personal views and judge for themselves and I have admitted I am just a plumbing and heating engineer expressing my own personal views.

[Guest]

Re: Swift Advances/Ocean finance

Firstly my description was incorrect, I meant that the interest charged through the term of the agreement would be 1.31% or 15.72% annually. As you posted earlier the balance would be reducing hence when you work backwards you get a flat rate of 9.8% because the 1.31% would be calculated against decreasing capital, 9.8% would be the average across the whole term.

Secondly you are credited the whole £8000 but you only receive £7660 because £340 has been used to pay your costs so you are paying for the whole £8000 but only receiving £7660 in your pocket as it were.

No not at all this would make the agreement completely none compliant and breach the Consumer credit act, the total credit is a prescribed term and must represent the sums advanced to the debtor.

What the APR is designed to inform the consumer is that this deal is the equivalent of borrowing £7660 at 16.89% so you might be better off trying to find a loan that gives you £7660 without the costs and at a lower rate than 16.89% because you will be better off. This is why the APR on payday loans is quoted so high because it takes into account all the charges and fees that can be charged if you have the balance over a year when the facility is only supposed to be short term ie days.

The APR on payday loans is so high because this is how the calculation works it really is a simple as that even if her were no other charges the APR in a monthly interest rate of 30% is about 2666%


It is designed to inform the consumer that it is very expensive because of clauses hidden in the terms and conditions without the consumer having to trawl through the small print.
Andy I am not going to question your extreme knowledge on the subject, even though you have not admitted it it is abundantly clear that you are or have been a professional in this area at some point so I will let people read my personal views and judge for themselves and I have admitted I am just a plumbing and heating engineer expressing my own personal views.

Yes i admit i have some little experience
It is not a competition for who knows the most, the important thing is that when people challenge these agreements, and I think they should they do so with the right(and wining arguments).

[eire13]

Re: Swift Advances/Ocean finance

Well thanks Meellis I appreciate your help. I think perhaps only Swift "Customers" that get into difficulty can appreciate how stressful and soul destroying these and other loans like it are especially when your home is at risk. And yes there have been arrears on the account which are paid now thank God. The charges mentioned previously are things like £250 for sending a default notice when I was doing my best to still pay something. Charging £60 for a field agent report when all he did was come to the door with his clipboard and I told him I was not the person he was looking for and closed the door. £23 per letter sent, £64 admin charge etc etc so nearly £4,000 of the amount left is made up of charges and interest. We have already paid the original amount back but still owe over £5,000. Swift claim all their charges are fair. It is with the FOS now so hopefully they may not think it is fair. I read Amethyst thread about Swift and the FOS with interest and hope we might be one of the successful ones. Thanks to everyone.

[meellis]

Re: Swift Advances/Ocean finance

You are right Andy it isn't a competition and thanks for the appreciation Eire you are right nobody understands quite as much unless they are in the situation. I read too many reports of people getting near or at the end of their agreement to find that they still have a lot to pay and I feel one of the keys is to find out how this happens. In court and with the FOS it is quickly brushed under the carpet as costs of being late paying at times and it can't be argued because the only evidence to hand is a payment schedule that shows late or missing payments. Me personally when I look at my so called statements I lost £1400 for being two days late on a payment and this is before you take into effect the compounding. Somebody needs to understand the accounting structure to be able to question this correctly because I feel we are coming to a point that a lot more people will be coming to the end of their agreements and finding the same.

[Guest]

Re: Swift Advances/Ocean finance

Yes unfortunately, even if there are relatively small arrears and they are not addressed quickly the account can "roll up", this means that even if the debtor continues to make the contractual payments the interest being charged on the principle does not cover the addition made by its monthly accrual.
The result is that the balance of the loan increases despite the lender making the agreed contractual payments, and to make matters worse this increase in itself draws more interest which is compounded. It is a bit like the snowball effect.

The problem in challenging the situation is trying to wind the clock back to the cause of the problem, usually by the time it is addressed there is contractual inters involved plus default charges, plus interest on the above some at contractual rate some compounded some not, then sometimes the balance and arrears are capitalized and then this is added to the loan, bit of a nightmare really.