A debate of interpretation please and opinions welcome

[fallenangel]

In consideration of the wording on a credit agreement what do you interpret it's meaning. and what is the total loan? As compared to example B


EXAMPLE A:-


If a loan agreement states the following;

credit (A) £10000

PPI (B) £0.00

Brokers Fee (C) £350.00

Total Loan amount £1350 (A + B + C)

Charges (E) £xxxxx (i.e Brokers Fee) + interest as described

Under definitions it states - "Loan" means the Total Loan Amount

and with regards to payments it states this;

What and when you pay


Each monthly payment is the aggregate of;

• any interest falling due for payment
• any principal falling due for payment during any Month in reduction of the Loan so that the Loan is repaid at the end of the Term
• any other sum which has fallen due and which we have have agreed may be paid by monthly payment

EXAMPLE B:-

If the loan agreement stated;

Loan (A) £17500

PPi (B) £0.00

Amount of Credit (A + B) £17500

Brokers Fee (D) £875

Total amount Financed (C+D) £18375

Under definitions it says

"Payments You must repay the Amount of Credit together with any amounts financed under this Agreement with interest by making the Monthly Payments"


And so for debate;-

Do both loans means the same?

in example A is the brokers fee added to the loan, or is it as stated clearly in example B considered to be 'financed' in addition to the loan?



What do you think?

[Amethyst]

Re: A debate of interpretation please and opinions welcome

I'd say they are the same - the brokers fee is seperated from the cash loan amount and clearly stated - in both cases the amount for the brokers fee is leant to you up front and incurs the same interest as the cash loan - so the only difference between the two really is that example B have an extra subtotal in.

If the brokers fee wasn't clearly stated then you'd have an argument (ie. if you borrowed £1k and the agreement just said £1.3k without detailing what the heck the £0.3k was)

Best way to get proper advice on this is to scan in the two agreements as that often makes thinsg 100 times clearer.

Just my opinion anyways

[fallenangel]

Re: A debate of interpretation please and opinions welcome

Thanks Amethyst I always appreciate your opinion and comments.

[fallenangel]

Re: A debate of interpretation please and opinions welcome

Amethyst - slightly off the topic - where the brokers fee is added to the loan - is the consumer supposed to be made aware and agree?

[Amethyst]

Re: A debate of interpretation please and opinions welcome

Yes. There has been a bit of fuss about hidden brokers fees and secret commissions over the last few years...in some cases the brokers fees weren't mentioned and were hidden in the figures giving a distorted total credit amount. The brokers fee should be shown in the charge for credit (cost of credit) part of the agreement which it is in both those examples you have given.

As the broker fee was shown on both agreements you want to look at Southern pacific Loans ltd v Walker & Anor [2009] EWCA Civ 1218 and also the more recent Christopher Flanagan v Nemo Personal Finance & Central Capital Limited [2011] (unreported) (info - A load of old flannel: Hurstanger revisited tho you should be able to find a less biased report somewhere too) These are more on the secret commissions side of things.