Confusion on Interest rate information

[jumper999]

I need some help please with understanding 2 clauses in my unreg loan agreement. I am trying to understand them and apart from them which I believe are misleading do not make any sense to me.......so would appreciate any input from someone who can understand it please

Clause I reads:

This is a variable interest rate loan. The concessionary interest rate charged in the first 3 months will be o.00%, after this period, there will be a discount of 2.00% off the annual nominal rate for 12 months giving a rate of 7.80%. When this discount period ends, we will charge interest at your annual nominal rate which is currently 9.80% for the remainder of the loan term.

Right next clause J read:


3 months payments of £0.00, followed by 12 months payments of £285.79, followed by 288 monthly payments of £335.76(assuming no variation in the rate of interest per month)


Now as I see it in clause I they advise that the interest rate of 9.8% will apply for the REMAINDER OF THE LOAN, but clause J advises that there is a possibility that my interest rate could vary.

I believe this is misleading and confusion, as it gives the lay person the impression that the loan will on one hand stay at 9.8% for the rest of the loan term, and then says it may vary.

Not sure if I am confused about trying to make heads or tails and maybe someone could help explain it clearer please?

Thanks in advance

[Amethyst]

Re: Confusion on Interest rate information

I think the part which says ''This is a variable interest rate loan.''

and the word ''currently'' here

''annual nominal rate which is currently 9.80%''

makes it clear that it is a variable rate loan and the mentions of ''annual nominal rate'' and ''current'' make it clear the rate is the annual nominal rate applicable at the time.

I think both I and J make it quite clear the rate is variable.

[jumper999]

Re: Confusion on Interest rate information

Thanks AME for your quick reply. Would you say that my loan should be going up n down in line with BOE or any other linked rate of interest.....LIBOR, Tracker etc etc?

And if it was 9.8% at the applicable time how would I know what rate it is now, as my lender has refused point blank to enter in to any discussion about how they calculate their interest rates and what they are linked to.

[Amethyst]

Re: Confusion on Interest rate information

Who is the lender again ?

Info on nominal interest rates
Nominal interest rate - Wikipedia, the free encyclopedia

[jumper999]

Re: Confusion on Interest rate information

Who is the lender again ?

Info on nominal interest rates
Nominal interest rate - Wikipedia, the free encyclopedia

It's Blemain, and the interesting or should I say confusing part are these 2 clauses to:

clause 29.6 "Liabilities" means all monies (whether principal, interest, expenses or otherwise) due to the Lender by the Mortgagor (whether as principal, surety or Charge or any loan to the Mortgagor or any Credit Agreement and the enforcement of any rights of the lender against the Mortgagor and interest on all such amounts at the Rate.

clause 29.7 "Rate" means (in case of unregulated agreements) the higher of 5% above the base rate for the time being of the Bank of Scotland or the highest rate payable under any Credit Agreement and (in any other case) the highest rate of interest payable under the relevant Credit Agreement.


Blimey, I really do not have any idea why the mention of Bank of Scotland is stated, is the BOE and the BOS the same?

[Amethyst]

Re: Confusion on Interest rate information

Blemain Finance back down on reposession claim - Legal Beagles Consumer Forum might be of interest.

[Amethyst]

Re: Confusion on Interest rate information

Just a s a starting point to reaearch those clauses;


(5) The rate mentioned in sub-paragraphs (a) and (b) of paragraph (1) above is the higher of the following, that is to say—

(a)the sum of one per cent and the highest of any base rates published by the banks named in paragraph (6) below, being the latest rates in operation on the date 28 days before the date on which the agreement is made; and

(b)13 per cent.

(6) The banks referred to in paragraphs (1)(c) and (5)(a) above are—

*

Bank of England
*

Bank of Scotland
*

Barclays Bank PLC
*

Clydesdale Bank PLC
*

Co-operative Bank Public Limited Company
*

Coutts & Co.
*

Lloyds Bank PLC
*

Midland Bank Public Limited Company
*

National Westminster Bank Public Limited Company
*

The Royal Bank of Scotland p.l.c.
*

TSB England & Wales public limited company.



From The Consumer Credit (Exempt Agreements) Order 1989 Exemption of certain consumer credit agreements by reference to the rate of the total charge for credit

[Turboman]

Re: Confusion on Interest rate information

Hi Jumper

As Ame has said----its quite clear that they have worded everything as Variable Rate

Re--interest rate rises

They can increase or decrease it according to THEIR criteria---not neccessarily BOE or Libor----it could be increased for instance due to excessive bad debts and commercially they need more revenue

Or--like credit cards--if you get a bad credit record---they sometimes increase it also

Firstplus were notorious for increasing the interest rate whilst Libor was falling even

Sooooooo---you can't predict it precisely

[jumper999]

Re: Confusion on Interest rate information

Blemain Finance back down on reposession claim - Legal Beagles Consumer Forum might be of interest.

Thanks AME, I have read that story many times. Also thanks TB, one thing that I can say for certain is the wording that Blemain have used to draft this contract is far from plain and in and easy language and is most mis leading to the customer.

I have read many stories on the First Plus complaints website and they have very similar issues to the ones I have, but they are on an uphill struggle with First Plus also.

I believe that this is a one sided contract to the benefit of the Lender and therefore making it a very unfair relationship. That is my opinion and how far I will get on this argument is yet to be tested as it is not easy to say the least, nevertheless I really need to be clear on what these clause imply and what they really do mean.

Blemain are regulated by the FLA Lending Code and when asked they have to supply details on how they calculate and how they track their interest rate. I have it in writing from Blemain that they will not enter in to any discussions on this so that again is something unfair and maybe they have something to hide.

[Turboman]

Re: Confusion on Interest rate information

Thanks AME, I have read that story many times. Also thanks TB, one thing that I can say for certain is the wording that Blemain have used to draft this contract is far from plain and in and easy language and is most mis leading to the customer.

I have read many stories on the First Plus complaints website and they have very similar issues to the ones I have, but they are on an uphill struggle with First Plus also.

I believe that this is a one sided contract to the benefit of the Lender and therefore making it a very unfair relationship. That is my opinion and how far I will get on this argument is yet to be tested as it is not easy to say the least, nevertheless I really need to be clear on what these clause imply and what they really do mean.

Blemain are regulated by the FLA Lending Code and when asked they have to supply details on how they calculate and how they track their interest rate. I have it in writing from Blemain that they will not enter in to any discussions on this so that again is something unfair and maybe they have something to hide.

Hmmm----looks like my post above not actually correct Jumper

[jumper999]

Re: Confusion on Interest rate information

Hmmm----looks like my post above not actually correct Jumper

Thanks TB looks like there are many things that are not correct and by the time one tries to find if they are or not all brain cells seem to malfunction.

I know that Blemain have breached many OFT, FLA and even their own guidelines but getting it all together you have to port yourself to another galaxy where I believe these contracts were written

Maybe ET himself wrote them out and there is no human being who can translate them as to what they actually mean.

That's not to say that I will not keep trying :tinysmile_grin_t:

[jumper999]

Re: Confusion on Interest rate information

I was reading the R v Kettering Magistrates Court ( MRB Insurance Brokers APR) judgment and still am studying it and have found quite a few helpful tips

It is provided in s.21(2) that
" an indication given to any consumers is misleading as to a method of determining a price
if ×. what those consumers might reasonably be expected to infer from the indication ×
includes .. that the method is not what in fact it is".

But I think I will need to have quite a few reads to understand it properly

[jumper999]

Re: Confusion on Interest rate information

Does anyone have a link to warnings that must be on agreements YOUR HOME WILL BE REPOSSESSED IF YOU DO NOT KEEP UP PAYMENTS?

What rules and regulations apply to these warnings on unregulated agreements please?

[jumper999]

Re: Confusion on Interest rate information

I found this information which is quite useful


Security

Secured lending advertisements stating that offered products will be secured by a charge over the borrower’s home must include a wealth warning.

Form and Content of Credit Agreements: Pre-contractual Information

Certain essential information must be given to consumers prior to entry into credit agreements to allow them to consider the information before deciding whether to enter into the Agreement. This includes certain information concerning the creditor, credit (e.g., information relating to interest rate, repayments, early settlement information, security etc.), the agreement itself and redress. The pre contractual information must be provided in a form that does not form part of the credit agreement and must precede it. The draft regulations set out specific precontractual information requirements in the case of voice telephone communications.

These pre-contractual information requirements will incorporate the pre-contractual information requirements set out in the DMCFS and extend them to all consumer credit agreements, regardless of whether they have been concluded at a distance.

Sometimes the interest rate charged will depend on the lender’s assessment of the individual applicant’s credit worthiness. Whether it is feasible for consumers to be made aware in the precontractual information of the rate they will pay before committing to a credit agreement is being considered. The pre contractual information must also include a statutory wealth warning for any loans secured on homes.

For fixed sum variable rate credit agreements an illustration of how interest rates rises will increase payments will be required and the overall amount paid tailored to the individual loan.

Well, my agreement does not have this wealth warning.

[Amethyst]

Re: Confusion on Interest rate information

Consumer Credit Act "wealth warnings" might be of help (advertisement/promotion not agreement)