Blemain Finance Unfair Charges & Redemption Figure Good Afternoon All, I wonder if I can draw on the experitse, knowledge and experience of those who have had dealings with BF.

The details and concerns are as follows:Secured loan taken out in 2004 - £18900, settled in 2008 - £19,343. The breakdown of this is: £8,233 (rebate), costs & charges (£195), redemption admin fee (£395), default interest (£177), legal doc fee (£690).

I did ask for the formula as to how these figures were reached and was sent some strange numbers from taken from the office of fair trading website. Rule 78 was used I believe. Is there any challenge in the way this loan was calculated, 4 years later the loan had increased over and above what was originally taken out. I tried to address these concerns with BF but obviously i just got pushed aside and a letter was sent to justify their actions but i want and need to challenge its fairness.

Any views and opionions and quesrions on this would be grately appreciated. I believe that R78 was not used in settlement calculations from 2005 onwards.

I'm pretty sure the OFT sent an advise out to lenders to tell them to cease using it. Does anyone know if this is the case and the legal framework around this.

Does anyone have any knowledge in relation to my previous post?

I will try and find someone to help, it will most likely be later on today when those who advise in this section have finished work and had their dinner/supper

Here you go..

http://www.newlawjournal.co.uk/nlj/content/unfair-windfalls

The rule of 78, which increases the amount borrowers have to pay on early redemption by adding the loan interest to the end of the term and then giving only a partial rebate of the future interest charges, is something that both borrowers and conveyancers need to watch out for. The attraction of the rule to lenders is clear, particularly as the windfall for the lender increases with the term of the loan and the rate of interest. However, in Evans v Cherrytree Finance Ltd (unreported, 13 April 2007), the High Court decided that a contract term which permitted a lender to use the rule to calculate a settlement figure fell foul of the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083), and was therefore void.

 

 

 

But do wait while others pop in and advise what you can do about this

Have you made a Subject Access - SAR - request to the company ?

I found this calculator which you could use to check the figures before and after 2005

http://www.financecalcs.co.uk/Calcs/Settlement.php

the information I seem to be finding appears to be that if the agreement was made after 2005 the new rules would apply but, if the agreement was already running and over ten years in length the old rules would apply until May 2010

Hi

Yes this is the calculator i was going to post.

If the loan was under 25k it will be regulated under the CCA 1974 in any case, so the calculator is valid, if you want me to help work the figures out let me know, you can PM me and we will do it on the thread,

THe new provisions which replaced the rule of section 78 came into force under this regulation

http://www.legislation.gov.uk/uksi/2004/1483/regulation/10/made

Savings

10.—(1) The Regulations referred to in regulation 8 continue to apply, in place of regulations 1-7 of these Regulations, and the amendments in regulation 9 do not apply, in the case of a regulated consumer credit agreement entered into before the date on which these Regulations come into force—

(a)until 31st May 2007, if the agreement is for a term of 10 years or less;

(b)until 31st May 2010, if the agreement is for a term of more than 10 years.

(2) For the purposes of paragraph (1), the term of an agreement is the term originally provided for, or, in the case where the term was varied before the date on which these Regulations are made, the term provided for on that date.

Thank you all for the above information. It's fair to say the loan was taken out in 2004 so was regulated at the time. Looks like nothing can be challenged or a case brought forward. I do have one final loan with them to post on here taken out in 2007. Looking at posts and threads over the years many people have been hit by this company and its never in any positive light very negative. Individuals end up completely out of pocket. Even though the identity has changed I'm sure the framework is the same.

Yes it depends on the length of time your agreement was taken out over, if it was taken over 10 years then they should be using the new method of calculation if it was settled in 2008, if it was under ten years then they can use the old (1983/1553) rule of 78 regs.

This was a regulated agreement (as it was for under 25K) so may be worth checking out the T and Cs for any errors.

Good evening, I did say i would post more information about the other loan, plus some indepth details. First the settlement figure of £19,343 in 2008 was an orginal loan taken out in January 2004 for the sum of £18,900, this was a 12 year loan.

The APR was 15.29%Then in Janunary 2008 a secured loan of £4,503 was taken out. On top of this loan was £500 broker fee, £150 title insurance, so the opening loan was £5,153.

The APR was 13.90%.This loan was settled in August 2008 settlement figure being £7,829, this included £1000 plus for collection costs and £395 for redemption fees etc.

The collection cost for the larger loan was £195 but for the smaller loan it was £1000 plus. What was the difference in the way the loans were 'collected' and what was the process of the collection. I tried to challenge BF on all the charges and collection costs, plus the £55 x 3 for the settlement figure request and other letters in this regard on each loan.

They claimed they can charge what they like under the agreement. The Rule 78 increased the larger loan and i was sent a formula in respect of how it was worked out and none of the number or symbols made any sense. Can anyone advise on the above in terms of any possible claims and clarify the terms of the larger loan as this was a 12 year loan, the way it was calculated.

Thanks very much for your assistance.

Good morning I would love to see your views on my last post with the detail figures Dodgeball and any one eles. Thank you

Hi Ruby

The larger loan taken out in 2004 would have been calculated using RO 78,

shame if you had waited to may the following year it would have been the actuarial method

and saved you a few bob.

There are rule of 78 calculators o the web or I can work it out for you if you like.

The later one should have had its settlement calculated under the latre actuarial method,

the calculator above can be used for this or again if you are unsure I can do this for you as well.

Both agreements should be regulated, the charges they can charge a largely down to the contract,

unless they can be shown to be unfair. perhap a squint at the agreement may help here.

DB

Good evening DB

I did try to use the calculator but I'm sure the result was wrong.

Can you be kind enough to put the figures through to see what you come up with.

The APR was 13.9

loan started January 2008 and settled in August 2008.

300 month term.

7 payments of 73.56 made.

So starting balance 5153 settlement figure 7829.

Loan ran for 8 months but so many additional charges were added.

Let me know what you think or if you need more information for the final analysis.

Thank you

The APR works out as 18.9 % on those figures ?

total credit= 5153. 300 months. repayments 73.53

On the agreement it states 13.9. The actual loan was 4503 but 150 was added for the title and 500 broker fee

That's worse, those charges should be in the TCC anyway, are the repayments and term correct ? Is this agreement on here ?

Ok I will have to go over the documents this evening and get back to you. Thanks very much