Discrepancy on Statement and Agreement

[TiredofPaying]

Hello

In January 2007, before the CCA 2006 took hold, I took out a personal loan to finance a car purchase. I believe it was what is known as a 2 party, debtor-creditor-supplier regulated under cca 1974 restricted fixed sum loan (bit of a mouthful, sorry but that's what I was told it was) in that the lender owned the vehicle and sold it to me (that must mean that I have title, I guess) and financed it as well.

My question is related to the amount stated on the contract under key financial information. In the box marked amount of credit it says that theamount of credit is £19750 but on the statement the opening balance is shown as £150 more. The admin charges are shown as being payable at the same time as the first instalment and therefore not part of the loan and the credit facility fee is shown as being payable at the same time as the last instalment fee and therefore not part of the loan. The two fees do not add up to £150 and neither of them is £150. There is no mention of anybody being paid a commission anywhere in my agreement. Why is there a diiference?

Have I been had? If so, what can I do about it? Would a judge say it was de minimus and tell the lender to adjust the figures and pay back the amount + interest as it was obviously an error? Or would the judge agree with me that there was something fishy going on and throw out their agreement? Bear in mind thatthis is a rather large bank that has access to a lot of computers and clever people who are paid a lot of money to make sure that they comply.

ToP

[TiredofPaying]

Re: Discrepancy on Statement and Agreement

Golly gosh - I got 5 gold stars - more than I ever got at school!

Is it possible that this unaccounted for amount is some kind of insurance premium as in PPI? Or is it possible that somebody thought that I would never notice as they didn't send out statements before CCA 2006 took hold (April 2007). If it's the latter then anybody who had a loan before April 2007 should check their statements as they might get a nasty surprise but not half as nasty as the surprise the bank will get when you tell the FSA! Just think £100 x 10,000 customers plus interest for a couple of years! Knock that off their bonuses and give them a smack.

ToP

[mystery1]

Re: Discrepancy on Statement and Agreement

I would ask them what the discrepancy is.

You will find many clues , i believe, in the supreme court judgement of Southern Pacific v Walker

M1

[TiredofPaying]

Re: Discrepancy on Statement and Agreement

Hi M1, thanks for the info.I did ask them and they're thinking about it...

Just had a quick read and I don't think it's the same situation as mine. In Southern Pacific v Walker it was agreed that the Broker Admin Fee was advanced to the borrowers but in my case the note under the Broker Admin Fee clearly says that this amount (£150) is to be paid by me at the same time as the first instalment so how can the lender be claiming that it lent me the £150 if I am to pay it at the same time as the Broker Admin Fee? I did not need the £150 and certainly did not receive the £150 in between the start of the loan and the time the first instalment was due. What would be the point in the lender giving me £150 just to have me hand it back at the first instalment? At the start of the loan the main part of the money (the loan) went to the owner of the vehicle (the finance company) to pay for it. This left the £150. Who got that? I certainly didn't and consequently I didn't need to pay it back. I just paid the £150 BAF at the same time I paid the first instalment as per the note.

I think it's a little stratagem designed to catch me out and it did. Not only that I'll bet I wasn't the only one..

ToP

[TiredofPaying]

Re: Discrepancy on Statement and Agreement

Ah, I see, via a thread started by PeterBard that the charges due to the setting up of the agreement and administering it (Total Charges for Credit or TCC) should not become part of the amount being borrowed (Total Credit or TC) as it screws up the APR calc. The little equation which I picked up is

Total Amount Payable (TAP) = Total Credit (the amount borrowed or TP for short) + Total Charges for Credit (all the charges added together or TCC) or

TAP = TC + TCC

If I'm wrong then please tell me! My head hurts.

ToP

[Guest]

Re: Discrepancy on Statement and Agreement

Hi T
Any brokerage fees or admin charges should be in the tcc.
The car industry used to do this all the time it breaches the act and makes the total credit wrong.
It does not matter if they say it will be taken as an increased first payment or last payment.
What you need to do is check the APR with and without the fees in the total credit, see which one matches the one on your agreement.
There are a few calculators on line
The problem with them is that they do not usually take into consideration irregular or odd increased payments so if your first and/or last payment is increased then they will not usuallt take this in to account and it may mess up your reading.
Any way have a go, if you have problems I have a spreadsheet that works out APR to 3 decimal places so I will see what I can do.
Regards
Peter

[TiredofPaying]

Re: Discrepancy on Statement and Agreement

Hi Peter, thanks for stopping by.

Is this OFT doc relevant or is there a later one?

http://www.oft.gov.uk/shared_oft/bus...dit/oft144.pdf

ToP

[TiredofPaying]

Re: Discrepancy on Statement and Agreement

Hi Peter, I used the spreadsheet calculator at www.iansharpe.com and it is very easy to use. It's got a few easy to follow examples as well. Thanks for the intro.

I ran my numbers on the spreadsheet calculator without the unexplained amount that mysteriously appeared on a statement and the APR came out near as it could be - only 0.04% out but when I put in the unexplained amount the APR came out lower as the Total Credit had increased while the Total Charge for Credit did not change so the ratio altered.

ToP

[Guest]

Re: Discrepancy on Statement and Agreement

Hi Yes

But you must remember that you only recieved the amount that does not contain the mystery amount.

So your total credit figure will remain the same and your repayments should be increased by the mystery amount.

This will then shove it into the TCC and the APR will rise, this is the actual APR of your loan.

If it is beyond the alowed deviation permited by the regs it is none compliant.

Petr

[TiredofPaying]

Re: Discrepancy on Statement and Agreement

Sorry, getting confused again. I only used part of the money shown on the opening balance of the statement - the amount that does not contain the mystery amount, that I understand but how will my payments increase? The agreement says that it is a minimum of x months so are you saying that this could be increased and become y months? According to the agreement the interest rate is variable but I've checked the amounts of interest added each month and they seem accurate enough so the only way I can see that they can take payment for the mystery amount is if they add an extra payment on the end (assuming the interest rate stayed more or less the same as at the beginning of the agreement. Does that make sense? It's been a long day reading OFT guidelines...

ToP

[Guest]

Re: Discrepancy on Statement and Agreement

Hi

Sorry i was under the impression that they had increased the first payment.

There is no stated term on the agreement ,that complicates matters a bit.

Peter

[TiredofPaying]

Re: Discrepancy on Statement and Agreement

Hi Peter, the Total Credit amount on the agreement matches the opening balance on one of my statements but the statement sent to me recently shows that this opening balance has mysteriously increased by £150. This amount cannot be any of the TCC charges or combination of those charges. So where did it come from? Without this £150 the XL spreadsheet works fine but when it is introduced the results are not as per the agreement.

I'm confused! Is that what the lender was hoping?

ToP

[WendyB]

Re: Discrepancy on Statement and Agreement

Not sure if this helps, or not. Most car finance companies charge an "admin" payment at the beginning, which is taken with the first dd payment. This is usally £150. (or has been in the various finance deals I have had). There is also one with the last payment too, however I have been told that the last one will not be taken if the loan is settled early, even if its only settled a month early, i.e just by bringing the final payment forward this final charge can be avoided/saved.

[TiredofPaying]

Re: Discrepancy on Statement and Agreement

Hi Wendy, thanks for that info but it's not right as I paid the £150 at the same time as the first payment. I didn't borrow that £150 from the lender and therefore didn't need to pay it back over the life of the agreement as well as paying it with the first instalment. The agreement said that the admin fee was payable with the first instalment and therefore it did not need financing. My thinking is that I didn't borrow an extra £150 to pay it back a few days later - it makes absolutely no sense. If the amount of £150 is showing on my statement as having been advanced by the lender then why didn't I get a cheque for £150 at the beginning of the agreement at the same time as the seller of the car got his money so that I could hand it back to the lender when the admin fee was due? The main part of the advanced money went to the seller of the vehicle at the start of the agreement but the £150 just disappeared into thin air (or somebody's back pocket).

So now I've come to realise that I've borrowed an extra £150 for somebody's commission and now I'm paying that back with interest! Over the life of the agreement that £150 could be nearer £300. If I were you I'd look at your opening statement and your agreement and see if you have a similar situation. I may be wrong and if I am then somebody will have to tell me but at the moment I am not convinced.

I believe that hidden commissions are also called fraud. Your local trading standards office will be very interested - I know mine is!

Initially it doesn't make sense but when you look at it carefully it all becomes obvious.

ToP

[WendyB]

Re: Discrepancy on Statement and Agreement

I am confused now.

My sister recently took out finance on a car, which was actually for my daughter, who is only 17 but in full time employment. DD is taken out of sister's bank account and paid back to her monthly by my daughter.

Current finance agreement states

cash price (inc VAT) 3500.00
advance payment 0.00
Total Charge for credit 1087.60

comprises Interest 787.60
credit facility fee 150.00
completion fee 150.00

repayable by 1 payment of 269.10, 34 payments of 119.10 and a final payment of 269.10
states interest 7.5%, p.a, also shows APR at 20.3%

However, when I put the 3500 into calculator at 7.5%, this shows the repayment should be 108.87 over 36 months. Payment is actually 119.20. However, if I add the 300 ontocapital, ie total borrowed 3800, this calculates a payment of 118.20, almost the same figure as is actually being paid. This leads me to believe that we have indeed been charged interest on the credit facility and the completion fee, neither of which have actually been borrowed. As you say, the £150 was paid by as part of the first payment, by my daughter, and was not borrowed.

The difference in the monthly amounts is around 10 per month, which means that over the life of the loan this is 360 extra. Have I got this right or are my wires completely crossed?


some time later........

I have now tried a few different calculators, and they all say that at 7.5% interest on 3500 the monthly payment should be 108.87, which gives a total amount of interest of 419.38, not 787.60. So in effect, it seems that not only has the 300 been charged interest on, but its also been added on to the interest to make up the TCC??

I can feel a phone call tomorrow coming on...I will have to pretend to be my sister but that won't be a problem.....