Cca .. And other 'old' methods -Making sense of it all?

[Sparkie1723]

Re: Cca .. And other 'old' methods -Making sense of it all?

Hi section 93 means that the creditor cannot increase the interest on the account by virtue of the debtors default.

It does not in of itself prohibit other default charges, but if default charges are applied they must accrue simple contractural interst at a maximum of the original contractural rate.

Peter

Hi Peter thanks for that...but from what I can see is that creditors appear to compound this interest because they add the default sum to the outstanding balance which is then charged interest in the normal way which as we know is compounded.

Sparkie

[Guest]

Re: Cca .. And other 'old' methods -Making sense of it all?

Hi sparkie they shouldnt

s

After section 86E of the 1974 Act (inserted by section 12 of this Act) insert—

“86F Interest on default sums

(1) This section applies where a default sum becomes payable under a
regulated agreement by the debtor or hirer.
(2) The debtor or hirer shall only be liable to pay interest in connection

with the default sum if the interest is simple interest.”

Peter

[Ihaterbs]

Re: Cca .. And other 'old' methods -Making sense of it all?

Peter,


If the borrower defaults on a fixed apr term loan then, the lender is not able to charge interest greater than what's contained in the total amount payable?

Amount of credit 5k
Interest 1k
Loan term 60 months
APR fixed

[Guest]

Re: Cca .. And other 'old' methods -Making sense of it all?

Peter,


If the borrower defaults on a fixed apr term loan then, the lender is not able to charge interest greater than what's contained in the total amount payable?

Amount of credit 5k
Interest 1k
Loan term 60 months
APR fixed

Thats the way i read it. But remember we are talking about the rate of interest not the amount, but this can only accrue at a maximum opf the contractural
rate
Peter

[Guest]

Re: Cca .. And other 'old' methods -Making sense of it all?

Sorry I think I see what you are getting at. The total amount of interest due under the contract can be acceded as long as there is a term in the agreement that says something like interest will be charged until the debt is repaid. The purpose of section 93 is to ensure that the creditor cannot increase the interest rate post default.
[FONT='Calibri','sans-serif']Peter[/FONT]

[Ihaterbs]

Re: Cca .. And other 'old' methods -Making sense of it all?

Sorry I think I see what you are getting at. The total amount of interest due under the contract can be acceded as long as there is a term in the agreement that says something like interest will be charged until the debt is repaid. The purpose of section 93 is to ensure that the creditor cannot increase the interest rate post default.
[FONT='Calibri','sans-serif']Peter[/FONT]

The term to apply more interest circumvents sec 93?

[Guest]

Re: Cca .. And other 'old' methods -Making sense of it all?

The term to apply more interest circumvents sec 93?

Nothing can circument statute, section 93 does not say that the amount of interest due on the agreement cannot be ecceded, it says, the rate that the interst is applied cannot be increased post default.

Peter

[Ihaterbs]

Re: Cca .. And other 'old' methods -Making sense of it all?

Nothing can circument statute, section 93 does not say that the amount of interest due on the agreement cannot be ecceded, it says, the rate that the interst is applied cannot be increased post default.

Peter

Peter,

If a payment is late or missed, The creditor may apply late payment interest on the amount of the payment untill the payment is made. This will obviously increase the sum of interest stated in the total amount payable. Which as you state is fine.

However, I presume the creditor would not be able to apply monthly interest on any outstanding balance on default which would significantly increase the interest payable under the agreement.

[Guest]

Re: Cca .. And other 'old' methods -Making sense of it all?

Peter,

If a payment is late or missed, The creditor may apply late payment interest on the amount of the payment untill the payment is made. This will obviously increase the sum of interest stated in the total amount payable. Which as you state is fine.

However, I presume the creditor would not be able to apply monthly interest on any outstanding balance on default which would significantly increase the interest payable under the agreement.

Hi paul

There is no reason why he could not apply interest until the debt is payed, as long as it is at the contractural rate, the only argument that could be made on a fixed term loan would be that the repayment period eceded the contract, this is usually circumented by the term mentioned earlier.

I dont think that there is anything within the act that puts a cieling on the amount of interesst.
Peter
Peter

[Ihaterbs]

Re: Cca .. And other 'old' methods -Making sense of it all?

Hi paul

There is no reason why he could not apply interest until the debt is payed, as long as it is at the contractural rate, the only argument that could be made on a fixed term loan would be that the repayment period eceded the contract, this is usually circumented by the term mentioned earlier.

I dont think that there is anything within the act that puts a cieling on the amount of interesst.
Peter
Peter

There must be contactual provision for this though?

[Guest]

Re: Cca .. And other 'old' methods -Making sense of it all?

There must be contactual provision for this though?

No I dont think so,(although you could argue there should be) if for instance you deposited a sum of money in the bank then forgot about it for ten years, you would have expected it to have continualy gathered interest in the interim. From the creditors perspective i dont see the difference, except of course for the SOL. I think if things where any differnt there would have to be legilation that stated that this was not the case.

Peter

[Ihaterbs]

Re: Cca .. And other 'old' methods -Making sense of it all?

No I dont think so,(although you could argue there should be) if for instance you deposited a sum of money in the bank then forgot about it for ten years, you would have expected it to have continualy gathered interest in the interim. From the creditors perspective i dont see the difference, except of course for the SOL. I think if things where any differnt there would have to be legilation that stated that this was not the case.

Peter

I'd have expected it to accrue interest if the bank had agreed to pay me interest.