Thread: Consumer Credit (rebates on early settlement) regulations

Hi,
Took out a loan in Aug 2005.
Have asked for early settlement figure.
They've quoted Consumer Credit(Rebate on early settlement) regulations 1983..

Does this loan fall under the 1983 regs? I think I read somewhere that loans prior to may 2005 were covered by 1983 regs.

When do 2004 regs come into effect?

What are the differences in the working out of settlement figures?

1983 v 2004 regs which is better financialy for the consumer.

hope that all makes sense .....:?

Sharpman

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The 2004 regs came into effect for credit agreements written after 31/5/2005.

The differences in calculations are based on a requirement to move from the old and complicated Rule of 78 method to a new and even more complicated actuarial method.

The bottom line is though that it is generally better for the customer, although I don't think there is that much in it.

Search google for OFT801 for more information.

HTH

Originally Posted by ReasonableRon

The 2004 regs came into effect for credit agreements written after 31/5/2005.

The differences in calculations are based on a requirement to move from the old and complicated Rule of 78 method to a new and even more complicated actuarial method.

The bottom line is though that it is generally better for the customer, although I don't think there is that much in it.

Search google for OFT801 for more information.

HTH

thanks for info.
BTW the loan was for a figure of 33612.30 (including PPI)

So, as this loan was taken out Aug 2005 it's covered by the 2004 regs.
Do the company then have to use the 2004 regs to work out the settlement figure?

another question.
On my CCA in the Bit about early settlement it states that the figure would be worked out using formula set out in the CCA 1974. quote 'Not withstanding the fact that this agreement is not regulated by the act' unquote. What does this mean.

Also i'm looking at the loan pack again.

In the pack it states that the Settlement figure is calculated according to the 'Consumer credit(Early Rettlement) Regulations 2004.

On the Loan greement it quotes Consumer Credit Act 1974 for figure calculations.

On a recent Settlement Figure quote:
The Rebate allowed has been calculated in accordance with the 'Consumer credit(Rebate on Early Settlement) regulations 1983.

Ok, Now which one is legal? or are they all allowed to be used when the occasion suits them.

Sharpman

On loans taken out from 31/5/05 they must use the 2004 regulations to work out the settlement figure. A copy of the regs is here The Consumer Credit (Early Settlement) Regulations 2004 No. 1483

The rule of 78 was abolished because it front loaded the interest and so if you made an early settlement you often found that you had a large amount of capital still to pay.

Originally Posted by rory32

On loans taken out from 31/5/05 they must use the 2004 regulations to work out the settlement figure. A copy of the regs is here The Consumer Credit (Early Settlement) Regulations 2004 No. 1483

Hi,
Ok, Does the 2004 regs regulate loans over £25000. I think CCA 74 only regulates loans for less than £25000 from what I can make out.

If so, are there any strongly worded letters on here to enlighten Firstplus of the error of their ways.

Sharpman

Yes it would only regulate loans under £25000 unless it was consolidating credit that was already regulated by the Act.

Originally Posted by maybelline

well, could that calculation be any more complicated! are there any calculator tools that will do it for you?

Info thread here

http://www.consumeractiongroup.co.uk...alculator.html

it's a calculator that is on the OFT website. It works out all sorts.

Sharpman