miscalculated APR

[jbenne]

took out a fixed rate interest loan in June 2014

Amount: 14999
Interest rate 3.2% pa
APR 6.1%
Duration: 60 months
Total Interest: 2560
Total payable: 17559
Monthly repayment: 292.65

Received an annual statement with interest rate as 3.3% pa and 6.2% pa

obviously confused as this is a fixed rate loan so I reviewed the figures and asked them.
they said that during the time between me signing the agreement 6/6/14 and commencing repayment their rates changed to 6.2%pa

However this acutally didn't change the total amount of my loan. My payments remain the same and total amount.

Now for those mathematicians you can tell that this is because my original agreement is wrong.

The interest rate stated on the agreement is 6.1% APR but is actually calculated at 6.38%

The bank have not explained why this is the case - simply said it was a human error. Yet I watched the bank manager type all the details into their software, print out the loan agreement and discuss it with me.
They have offered to repay the £118.84 difference plus £75 compensation.


My question is do I deserve more? Is this a significant breach of contract? Can it be enforced?


I'm not saying it because of the desire to flake on my loan but I am a pedantic person so if rules are broken I expect this to be treated seriously. I have continued to make payments, and am not struggling with the debt.

[des8]

Re: miscalculated APR

Hi and welcome

The bank have refunded overpaid interest plus compensation.
I don't think you can expect more

A couple of years ago Barclays c****d up big time and refunded something like £100 million to 300000 customers and Northern Rock had a similar situation a while ago.

[seduraed]

Re: miscalculated APR

Seems fair enough to me I would ask them to pay the money against the low. So you stand one payment less to make.

[Crazy council]

Re: miscalculated APR

I haven't done the math yet, but that looks like the difference that compounding the rate makes to the APR Ie, is the extra % apr accounts for the interest due on the APR bit

http://www.calculator.net/compound-i...alculator.html

APR v.s. APY

Annual Percentage Rate (APR) is normally used when you borrow money, such as mortgage loan. It is an annual interest rate without taking the compounding of interest within that year. For example, if a mortgage rate is 6% APR. It means, you will need to pay an interest of 6%/12 = 0.5% every month. So it is equivalent to paying (1+0.5%)¹²-1 = 6.168% annual rate. If you borrow $100, it means you will pay $6.168 interest 1 year later.

[jbenne]

Re: miscalculated APR

I haven't done the math yet, but that looks like the difference that compounding the rate makes to the APR Ie, is the extra % apr accounts for the interest due on the APR bit

http://www.calculator.net/compound-i...alculator.html

sorry i don't quite follow.

This was part of my confusion, a lot of the calculators online are based off APR
yet if calculated using 3.2% per annum as compound interest I get a figure close to 17559
However this does not take into consideration the repayments that would be made.

From what I have read APR is essentially the complicated loan and compound interest calculation boiled down into an average rate over 1 year.

I had heard of the Barclays thing, it did sound similar but after lots of searches it seems a very uncommon problem, hence why I ask for advice

[Crazy council]

Re: miscalculated APR

Hi. i did manage to have a go at the calculation and will write it up for you later.

They made a mistake initialy it looks like ( increase from apr and IR 32. and 6.1 apr ). What makes it harder to calculate when you look at it , is they havent compounded the interest rate in the APR,

So, i think what you seeing, ( the extra 0.18 is the interest charged on the interest.

So, say you borrow £ 1000 with an interest rate of 10% you pay back £ 1100 ( £ 1000 + £ 100 = £ 1100 ) seems right, well not quite, see if you borrow over more than 1 year, you also have interest to pay, on any the the £ 100 thats been outstanding over the period so that would be ( £ 1000 + £ 100 + £ 10 ) £ 1110 .

Thats an over simplistic version so, i will write up the calculation from the figures you put in the first post, either later tonight or after tea tomorrow.

[jbenne]

Re: miscalculated APR

thanks crazy council,

a calculation would be really helpful

as you said, it is clear that a mistake has been made but actually calculating what that is becomes difficult