Thread: Can someone give a definitive answer on this please?

Originally Posted by lickthewallfatboy

I have read conflicting opinions regarding PPI being included in the cost for credit on an agreement and interest then being added to the whole amount.....some say they can,others say they can't,and that it should not be included

I am chasing my tail with this one-can anyone tell me what the actual position is?

thnx

Hello Ltwfb,

I feel that there is something in this, I have read that their was a house of commons ruling regarding this.

Peterbard who is very knowledgeable, posted this info on his agreement enforceablity thread on page 7 post 137.

There is probably info on the consumer credit agreement thread, bu I am sure you know how big that thread is

Total Charge for Credit

I think many of who have been working with the above for a while forget how difficult it was to get our heads around this in the beginning so what I have attempted to do here is an introduction to the subject.

I have found that incorrect TCCs can be responsible for a large percentage of agreement being incorrectly executed and, in many cases the cause of unenforceability, especially in older credit agreements.

When you repay a loan whether it be credit card, fixed sum, hire purchase or whatever you agree to pay it back in instalments over a period of time.

If you look at what you repay you will see it falls into distinct categories
1) The amount you borrowed
2) The deposit (in the case of hire purchase to buy a car for instance)
3) Any charges that you had to pay in order to get the loan.

The sum of the above form the TAP (Total Amount Payable)

The last category (3) consists of the Total Charge for credit.

TOTAL CHARGE for CREDIT consists of any monies that you contractually agreed to pay in order to procure the loan. It Includes;

• The interest charged on the loan
• Any setting up fees charged by the creditor
• Any insurance that was conditional on you getting the loan (if you didn’t buy they wouldn’t give you the loan)
• The final purchase element on a hire purchase agreement
• Any brokerage charges
• Any attached agreements necessary to the purchase of the loan

(An exhaustive list of charges that should be included in the TCC are contained in the TCC regulations 1980)

The consumer Credit Act 1974 section 9(4) says that,” (4). For the purposes of this Act, an item entering into the total charge for credit shall not be treated as credit even though time is allowed for its payment.”

So for a start we see that if one of these items appeared as part of the amount loaned it would contravene the Act.

Unenforceability

Apart from breaching the act there are other consequences for the creditor who gets this wrong. The main one is the amount loaned or credit, this as you know is a prescribed term and if missing or incorrect would render all agreements made before the 6th of April 2007 unenforceable.

If even one of the items listed above where to end up contained the amount loaned (Credit) then the total figure would be incorrect by that amount, and render the agreement unenforceable.


APR

Lastly I better mention the TCC in relation to the APR quoted on the agreement.
The perceived cost the loan can be calculated by using;
The amount you loaned,
The time taken to repay it and
The amount of interest you pay
This would give you the interest quoted in the agreement, however this would not include the total cost of the loan as it would leave out all the other charges that you have had to pay in order to get it.
The APR calculates its value by using the TCC instead of just the interest thus including all the charges and giving a truer picture of what the loan actually costs you

As you can imagine there are many other aspect to the TCC that I have not mentioned here but there are extremely good OFT pamphlets on the subject on there website and the full low-down is contained within the TCC regs 1980. I have not seen these available on line and had to buy mine maybe someone reading this knows a better source.

Best regards
Peter

I will continue to look around for info, but if you find anything can you post it up for all of us:grin:

Originally Posted by lickthewallfatboy

you have set me to searching about TCC regs 1980,and I have found this....

Statutory Instrument 1999 No. 3177

the following amendments are made to the 1980 Regulations in order to align their requirements more closely with those of the Consumer Credit Directive, as amended by Council Directive 90/88/EEC (O.J. No. L61, 10.3.1990, p. 14) (though the amendments also affect credit agreements to which the Consumer Credit Directive does not apply).

First, the 1980 Regulations are amended so that certain insurance premiums are required to be included in the total charge for credit, and all others are required to be excluded (regulation 3(e), (f), (g) and (h)). Those required to be included are premiums payable in respect of insurance arrangements required by the creditor for the sole purpose of ensuring that all or part of the credit, interest and other charges is repaid in the event of the debtor's death, invalidity, illness or unemployment.

Second, the 1980 Regulations are amended so that charges for guarantees are required to be excluded from the total charge for credit, with the exception of charges for one specified type of guarantee which are required to be included (regulation 3(g)). The specified type of guarantee is one required by the creditor to ensure that all or part of the credit, interest and other charges is repaid in the event of the debtor's death, invalidity, illness or unemployment.

that seems to be that then....

Hello,

What does that mean in English please