Interest miscalculations

[insomniac]

Has anyone here ever encountered a situation of a rate fixed sum secured loan governed by the CCA'74, where by the interest rate is variable but where the actual monthly amount then due no longer appears to be correct for the given amount borrowed?


The situation I am in is is exactly this where each time the interest rate has changed over the years (up or down) the discrepency gets larger :tinysmile_hmm_t2:

I have tried various loan repayment calculators, loan ammortisation calculators and even MS-Excel's financial functions and they all disagree with the lender, with exception of the very first payments which were spot on to the penny.

[pompeyfaith]

Re: Interest miscalculations

Have you S.A.Rd them and requested a breakdown that would be my first option then take it from there once you have all the info.

PF

[insomniac]

Re: Interest miscalculations

Have you S.A.Rd them and requested a breakdown that would be my first option then take it from there once you have all the info.

PF

Already done so and recieved a detailed statement fully broken down. It appears each month I am overpaying about £5 per month, of which £2 extra is debited from the capital balance still owing and the remaining £3 is interest.

In effect I'm making £2pcm of overpayments (I estimate the capital will be paid of about 3 months early at this rate!) and paying a extra £3pcm in interest for the privilege!!!!!

The curious thing is when the loan started the monthly amount paid was spot on (All calculators & Excel agree with the lender calculations), but on each rate change the error is getting bigger.


Maybe i'm one of the very few who ever check these figures as such things dont seem to be discussed as much as prescribed terms for example

[WendyB]

Re: Interest miscalculations

This might seem a stupid question, but have you actually asked the lender about these discrepancies and do they have an explanation for them?

[insomniac]

Re: Interest miscalculations

This might seem a stupid question, but have you actually asked the lender about these discrepancies and do they have an explanation for them?

Not a stupid question at all. Before I engage with them I was just wondering if anyone else had encountered such a situation so I could at least be pre-armed with the info and get an intelligent reply from them. I am kind of expecting an "oh we are right because we say so" reply from customer services so any pointers to what they may be up to especially if it commonplace was my hope.

If you type forensic loan audit into a search engine you find plently of American sites promoting such services (it seems a big thing there, as unenforceability is over here) but never theres no such service here.

Im in frontier land, I feel!

[WendyB]

Re: Interest miscalculations

Well yes I can see your thinking here, prewarned being preamed, so to speak. But until you ask the question and see what their answer is you won't be able to decide what next step to take. If I were you I'd ask them the question, see what they say and then explore the options.

[TiredofPaying]

Re: Interest miscalculations

Hi Insomniac (my middle name!)

Does it mention on your agreement that the APR may vary and therefore the length of the agreement may vary also?

ToP

[insomniac]

Re: Interest miscalculations

Not specifically that the APR is variable but the interest rate could vary.

There isn't any term that allows either party to change the total number of payments and adjust the loans length. As is stands the the enforced 'overpayments' would mean it could end 3-6 months earlier than agreed...ummmm.

[insomniac]

Re: Interest miscalculations

A bit of an update (yes i know its been a while)

I asked the lender about said calculations and they (eventually) replied explaining they are using a daily interest calculation method (as per the small print) thus this would explain my concern. They even gave me a worked example of how the calculation is done. Fine.

BUT......

1. their example assumes there was 32 days in the example month so theres 1 days extra interest than i would have included! I re-checked all their numbers for the first 24 months and on several occasions (not all) the interest applied in that month doesn't equal Daily Interest x No Of Days in Month.

2. They applied any interest changes (due to base rate changes) to the account slightly differently to the small print specifies. They have effectively admitted they have done this too, but have a "so what attitude" about this!

3. I also noted to them they had paid the broker a fee a considerable fee without borrower consent and mentioned Wilson v Hurstanger.......and caboooooooom. that got a whole page of an agressive response.....i may have stirred the hornets nest there.LOL

[Turboman]

Re: Interest miscalculations

Hi Insomniac
Me & Bill & Marshy specialize in Agreements/Offers/Premiums etc--ie Sums

Give us all the details & we'll look at it---or if uncomfortable with that---we have a separate E-Mail you can contact the Simiantics Enclave at Simiantics@gmail.com where we can look at it it before bringing it back to this thread

[insomniac]

Re: Interest miscalculations

Hi Insomniac
Me & Bill & Marshy specialize in Agreements/Offers/Premiums etc--ie Sums

Give us all the details & we'll look at it---or if uncomfortable with that---we have a separate E-Mail you can contact the Simiantics Enclave at Simiantics@gmail.com where we can look at it it before bringing it back to this thread

Thanks for your reply, I will compile the correspondence at some point but the issues are
1) lenders implementation of the way the interest is applied to the account once the rate change in announced varies slightly what the T&Cs say. Amounts invloved are small but cummulative none the less. Lender accepts there's a difference but think thats ok according to them because my losses are small!

2) the amount of interest applied each month doesnt always tally with the number of days in a month period. I haven't checked every months repayments given theres 4 years worth and once again small compared to total interest to be repaid. Its hard to assess what these 'odd' months' interest should be in part because of problem 1). Lender very dismissive of this issue.

My calculations were repeated using the built in function(s) in OpenOffices excel clone, based on lender worked examples.

[Turboman]

Re: Interest miscalculations

Thanks for your reply, I will compile the correspondence at some point but the issues are
1) lenders implementation of the way the interest is applied to the account once the rate change in announced varies slightly what the T&Cs say. Amounts invloved are small but cummulative none the less. Lender accepts there's a difference but think thats ok according to them because my losses are small!

2) the amount of interest applied each month doesnt always tally with the number of days in a month period. I haven't checked every months repayments given theres 4 years worth and once again small compared to total interest to be repaid. Its hard to assess what these 'odd' months' interest should be in part because of problem 1). Lender very dismissive of this issue.

My calculations were repeated using the built in function(s) in OpenOffices excel clone, based on lender worked examples.

Hi

From PM -I have sent you background stuff as to our credentials--lol--and I gather you are sending us some detailed stuff--

Don't forget--

The APR is a snapshot in time taking into account brokers fees etc---and we need the AIR--Actual Interest Rate

When calculating Daily Interest--the interest is on the previous days balance & so not same as 30/31/32 etc x Interest you are doing

Any new rate implementation is calculated at the date implemented, taking into account the actual balance remaining on that day, and the final finish date as on original agreement

The Excel Templates use monthly Simple interest not Daily Compound Interest--so if you don't understand interest--leave them alone

One of the best is the Amortizit (not Loan Calculator) from here where you can vary the variables!!--and calculate just one of the variables!!http://www.pine-grove.com/

its 30 days trial---but you may know possiblyhow to use it again ???

Clue:--Partitioning/Images/Acronis/Powerquest Drive Image /separate multiple operating systems etc........and if you don't understand the clues---you can't join Simiantics Enclave (Me , Bill & Marshy holding area) as a full member---only as a rookie-lol

Look forward to receiving your stuff as an acedemic exercise---but I doubt there is anything untoward

Turbo

[Bill-K]

Re: Interest miscalculations

Hi Insomniac. Turbo has asked me to look at this as he is currently having to deal with some other unavoidable issues. I've had a look at the first worksheet, where there there are 3 highlighted anomalies, but I had to reconstruct the Spreadsheet, as it didn't work in Excel.

Looking at the figures, I can't see anything that explains the anomalies. I don't think the lender uses compounding at all, and that the 'compounding' referred to in the agreement is actually just 'accumulating' the daily interest each month. However, there is no column in the 'Real' side of the SS for entering the 'Real' - or actual - dates of each repayment. So, it is quite possible that the 3 anomalies shown are due to late payments, in which case there would be more days in those months when the balance was at the previous level, and thus a higher daily rate added to the cumulative monthly interest total.

In effect, if a payment arrived later than scheduled, then the calculation of interest for that month could be based on 32 (or more) days - as opposed to the actual number of days in that month used in the spreadsheets. Even if the payments were via direct debit, there could be months where it arrived late - owing to the pmt. due date falling on a weekend, for example.