Beginners Guide to Total Charge for Credit for unenforceable agreements

[Guest]

Re: Beginners Guide to Total Charge for Credit

Thanks for that Peter and don't apologise. It's very interesting. I can see why they have taken the Admin fee and stuck it onto the Total Credit as it's to gather interest over the life of the agreement and I can see that it alters the ratio and therefore the APR. Are you saying that in Wilson the Admin Fee was added to the Total Credit and left there but in Walker the Admin Fee was put into the Total Credit figure to generate interest and then that Admin Fee and the interest it generated were then put back into the Total Charge for Credit to reset the balance and calculate the interest rate? This re-set being recorded somewhere in the agreement.

Is APR important with regard to making the agreement enforceable? I read that it is only there as a guideline and, in any case, it is only representative at the beginning of the agreement.

ToP

Hi

Yes the interst rate is purely a product of the total credit and the interst generated by it.

By takeing the admin fee out of the total credit the calculated rate will be reduced.

But the inclusion of it in the total charge for credit will increase the APR as this takes account of all charges.

The APR is not a prescribed term but this does not mean it is not an important figure it is the main indicator to most people of the value of the loan.

In one case a creditor was criminally prosecuted for grossly miss quoting an APR.

Its application in the future with the newish regulations contained in the 2006 regulations regarding unfair relaxhionships will i think be the new way forward regarding challenging agreements post April 2007.

Peter

[TiredofPaying]

Re: Beginners Guide to Total Charge for Credit

If I'm understanding this correctly then in Walker the Admin Fee was put into the Total Credit to generate interest but then the Admin Fee AND its interest were removed to the Total Credit Charge part of the equation TAP = TC + TCC to produce the correct APR. Where would this movement be shown on the agreement?

Sorry for labouring the point but I just need to get this quite important point settled in my brain!

ToP

[Guest]

Re: Beginners Guide to Total Charge for Credit

Hi Its OK

THe interest rate shown on the agreement would be just the amount of interest charged(not the total charge for credit)/ total credit(without the fee).

The Apr would represent the Total charge for credit( Admin fee +interst on the total credit +interesest on the admin fee)/total credit.

YOu see how the APR gives a truer picture of the credit bargin.

Peter

[TiredofPaying]

Re: Beginners Guide to Total Charge for Credit

Hi Peter, I can see that

Interest rate = interest charged on the Total Credit divided by the Total Credit

APR = Total Charge for Credit including Admin fee + interest on Admin fee + interest on Total Credit divided by the Total Credit

but I can't see why Wilson was wrong and Walker was right. Unless the Admin Fee and its own interest was left under the Total Credit sum for the purposes of producing APR and in Walker the Admin Fee and its own interest were removed and put back under Total Charge for Credit. If this is correct then how can the consumer tell the two situations apart without employing a mathematician? Is there something in the agreement that would alert us mere mortals to the fact that the Admin Fee and its own interest had been left in the Total Credit figure, as per the situation in Wilson?

ToP

[Guest]

Re: Beginners Guide to Total Charge for Credit

Hi Peter, I can see that

Interest rate = interest charged on the Total Credit divided by the Total Credit

APR = Total Charge for Credit including Admin fee + interest on Admin fee + interest on Total Credit divided by the Total Credit

but I can't see why Wilson was wrong and Walker was right. Unless the Admin Fee and its own interest was left under the Total Credit sum for the purposes of producing APR and in Walker the Admin Fee and its own interest were removed and put back under Total Charge for Credit. If this is correct then how can the consumer tell the two situations apart without employing a mathematician? Is there something in the agreement that would alert us mere mortals to the fact that the Admin Fee and its own interest had been left in the Total Credit figure, as per the situation in Wilson?

ToP

Hi
Basically the Wilson case was wrong because the fee was part of the total credit, this meant that the calculated interest rate gave the impression that they were getting more money than they were. The walker case didnt include the fee in the total credit so the interst rate generated was correct.

Yes the only wasy to find out if the fee is included in the TCC or in the total credit(as far as APR is concerned) is to calcuate the APR in both cases and see which one fits.
Peter

IF the calculation shows the fee in the total credit then bingo.

[TiredofPaying]

Re: Beginners Guide to Total Charge for Credit

Finally got there in the end. Thanks for your patience.

There is a reason for my dogged persistence... Could you have a look at my thread (some kind soul gave it 5 gold stars so it must be worthy)?

http://www.legalbeagles.info/forums/...ad.php?t=23833

I need to make sure that the amount that appears to have crept onto my statement really should not be there. It would be interesting to see how many people have bought something seriously expensive to find that there's unexplained amounts being tagged on.

ToP

[Spamheed]

Re: Beginners Guide to Total Charge for Credit

on my agreement posted here Egg have simply stated:

Principal Amount £5xxx Loan Payment Protection £1xxx Total Amount £6xxx

No of Monthly payments XX and xx payments of £xxx

The word "Credit" isn't stated

They have claimed an APR of 7.9% which is correct if the above Total amount is used but if the PPI is taken away and only the Loan amount used then the APR is 16%+

am I right in thinking that the PPI amount shouldn't have been added to the "Total Amount" and that this is a breach ?

[Guest]

Re: Beginners Guide to Total Charge for Credit

on my agreement posted here Egg have simply stated:

Principal Amount £5xxx Loan Payment Protection £1xxx Total Amount £6xxx

No of Monthly payments XX and xx payments of £xxx

The word "Credit" isn't stated

They have claimed an APR of 7.9% which is correct if the above Total amount is used but if the PPI is taken away and only the Loan amount used then the APR is 16%+

am I right in thinking that the PPI amount shouldn't have been added to the "Total Amount" and that this is a breach ?

Hi

The issue here is, was the ppi optional.

If it was then yes they can add it to the loan so your agreement would be correct.

If it was not, in other words taking it out was a condition of obtaining the loan then no it should not be in the total credit.

Peter

[Spamheed]

Re: Beginners Guide to Total Charge for Credit

Hi

The issue here is, was the ppi optional.

If it was then yes they can add it to the loan so your agreement would be correct.

If it was not, in other words taking it out was a condition of obtaining the loan then no it should not be in the total credit.

Peter

On the agreement provided there is nowhere to select or deselect the ppi, certainly no separate t&c and I have no recollection of ever requesting it.

It soundss like the agreement wouldn't be the document required to prove or disprove this, it would be the application or other document which may have preceded the agreement.

[Guest]

Re: Beginners Guide to Total Charge for Credit

On the agreement provided there is nowhere to select or deselect the ppi, certainly no separate t&c and I have no recollection of ever requesting it.

It soundss like the agreement wouldn't be the document required to prove or disprove this, it would be the application or other document which may have preceded the agreement.

Hi
I would have to see the agreement, but you need not worry about any terms and conditions that are not part of the agreement document.
Usually these agreements cover themselves by saying “optional PPI”.
If not you could say that you were led to believe that the ppi was part of the package and as such was not optional, if successfully argued this would mean that the ppi should have been in the total charge for credit, and the total credit was incorrect and thus the agreement would be in breach of 127(3) and unenforceable.
Peter

[Spamheed]

Re: Beginners Guide to Total Charge for Credit

The agreement is here it certainly doesn't provide any such description as "optional PPI"

taking the agreement at face value I would believe that the PPI was pre-agreed and as I stated earlier, I wouldn't have agreed to it as I was self employed at the start of 2005

[Guest]

Re: Beginners Guide to Total Charge for Credit

Hi

Well the first thing iwould do is reclaim ant ppi you have paid + interest.

This is not my area but i brlieve it is quite easy to do and it was obviously missold.
there is a section on this forum i think.

If you are in arears on this`account they will credit you for the amount.

I would then cchallenge the enforceabilty of the agreement on the grounds that the prescribed term for total credit was not correctly stated as disscused earlier.

Peter

[Spamheed]

Re: Beginners Guide to Total Charge for Credit

Thanks for that PB, I've already sent off the initial letter to Egg, from what I've read they tend to delay the inevitable for as long as possible.

I was thinking how Ironic it would be if Egg sold an account with less than correct documentation and then completely cattled the assignees claim by refunding the ppi and thereby accepting misselling (whether accepting liability or not)

[Linus]

Re: Beginners Guide to Total Charge for Credit for unenforceable agreements

Hi
I realise that this is a very very old post but just wondered how the total charge for credit worked when there was an initial interest free period.

I have an old credit card that gave me 3 months interest free , 12 months interest free on balance transfers and a normal APR after these periods.
In the agreement that I have - call me mr organised- there is no mention of the credit limit and i have no idea if it has increased over the years, I guess it may have done.

The charge for credit says that it is for either 1500 or the credit limit (if known)


There is however a Total charge for credit

Now I have done a backward calculation and the TCC appears to be consistent with a credit limit of £5500 however if there was 3 months interest free period, should that have been included in the calculation i.e borrow 5500, zero interest for 3 months and the normal interest rate for 9 months. I have yet to do the backward calculation but I suspect it would make a rather odd figure

I am just curious as I have started to take an interest in this area - I have a couple of friends in financial difficulties