Well, they call it CAPITALISATION, but it's interest. On my statements it says calculated on the daily outstanding balance, but every which way I try, NOTHING adds up! My plan was to get their miscalculations printed out before tea, but I'm going to be sitting here all bloomin night. Does anybody have any insight into Welcome mathematics?

I'm arguing with them over some old arrears but they can't tell me the exact figure. From my calculations on the contractual paments and actual payments, even after their charges and additional interest, the arrears are cleared (plus some), yet I'm still being charged a 'default sum fee interest' every month and their advice is to carry on overpaying ... stuff that!

Moved to Welcome Finance Forum

hehe

welcome [pun intended]

to the great world of welcome fleecers ltd.

i'd have a read of a few thread

that will give you most of the info you need.

but you are not alone!!

dx

in my case it was rule 78

too complicated for me

but this calculator helped

www.hughchou.org/calc/rule78.cgi

hope this helps

essexboy

nice link

dx

Thanks, I'd already tried regular amortization ... way out.

I'll let you know if mine is the same .... just inputting the inital figures doesn't work, but it might get me a bit closer.

I can get the figures to £5.50 a month out with amortization and a bit of fiddling.

ok, mines definately not rule of 78s, my interest rate is going up by a tiny amount every month rather than down, but not by the same amount, not on any form of scale, and not by the number of days in the month.

hallelujah!!!!!

My loan started on 30 nov, 1st payment on 1st jan. They've added the .5 month to the inital inital loan amount (doesn't show this though) then capitalised some of it. After 60 months regular payments, we'll still owe that half month. Nice little money earner for them, that nobody spots.

Now I've worked this out, where do I go with it?

My view is this.....If they have added interest to the total amount of credit,then the same total amount of credit is wrong which makes the agreement unenforceable.It could also be argued that this xtra is a hidden charge.

but until the end of the agreement, they could argue that the monthly interest rate will get adjusted later on to take account for it ... if there's any charges or arrears by then, it would be very difficult to argue with them and prove they've done otherwise.

Interest rate on the loan is supposed to be 21%, but the statement adds up to 21.3% in the first 12 months of on-time payments. I can't find any laws which say the statement has to tally with the agreement.

I've sent a letter asking for an explanation and I've to send my letter and their reply to trading standards and FOS.

Can any one* help. I am a bit confused with rule 78.

Can Rule 78 be used when calculating the original figures as stated on the loan agreement or is it purely for calculating the repayment figures. Any supporting legislation ect most appreciated. *Why have an APR if Rule 78 calculator used?

to further confuse and rip off the punter.

dx

Apparently use of rule 78 was considered unfair since may 2005.

Surely, if they (the sc*m) have issued loans since that date and are being repaid under the use of rule 78, then surely the agreements are unenforceable??????

Anyone agree?

bump!

I had the same issue I thought my Total amount of credit was incorrect due to certain members on this forum not knowing how welcome work there agreements out. Welcome and the FOS informed me this is how they do it.

They charge interest to Interest bearing Loan agreements based on a monthly flat rate which is calculated on the outstanding balance.

(AIR)This is the monthly Interest rate x12 which gives you the annual flat which is proberly stated on your agreement somewhere.

The APR is a compounded rate that includes the charge for credit (Acceptance Fee, MIF) as interest.

If you read my thread you will see I was informed that my figures were incorrect and Challenged this with the fos for 6 months to be told the above and my complaint wasnt upheld.

This was how welcome worked my agreement out, wether everybodies elses is the same I would'nt like say.

can you give an example with figures in post 15?

Hi Emanevs

OK so interest is calculated on a monthly basis in my case 1.8% which means AIR is 21.6 % this is just 1.8 x 12. The 23.9 % interest as stated on my ageement is 23.9% This is the annual rate that includes the effect of compounding, which is interest charged on interest.

So my agreement was

18591.90 loan and ppi

interest charge 29610.17

acceptance 235.00

mif 1625.45

total charge for credit 31470.62 and monthly payment 417.19.

That's right, but it's my MONTHLY interest rate that's reducing each month when I look closely at the capitalisation each month. On the face of it, everything looks as it should, but by the end of the term, I'll still have an outstanding balance. The only way I get the same interest rate applied each month is if I increase the initial loan amount.

5476.27 94.71 148.39 1.7295%

5422.59 93.68 148.39 1.7276%

5367.88 92.73 148.39 1.7275%

5312.22 91.75 148.39 1.7271%

5255.58 90.76 148.39 1.7269%

5197.95 89.75 148.39 1.7266%

5139.31 88.73 148.39 1.7265%

5079.65 87.68 148.39 1.7261%

5018.94 86.62 148.39 1.7259%

4957.17 85.54 148.39 1.7256%

4894.32 84.44 148.39 1.7253%

4830.37 83.32 148.39 1.7250%

I would'nt like to comment on yours Hybrid77 its took me 6 month to get welcome to admit how mine is calculated.

Whats your opinion emanevs ?

I can think of a couple of things:

1) The use of using rule 78 is unfair - FACT.

Perhaps someone can think of what law we could use against the **** in this respect giving us a loan of which has unfair contract or term?

2) The way in which the loan is paid off makes a whole mockery of the interest amount stated on the loan.

3) If the interest rate is incorrectly stated on our loan agreements, then clearly schedule 6 (prescribed terms) will mean that a court must declare the agreement unenforceable.

4) Once the agreement is delcared unenforceable, then they have an invalid security of which must be removed.

Can anyone help with (1) case law??

bump!!!!

Rule of 78 only applies to the calculation of rebates if you pay off the loan early. Welcome work out actual interest in the way the BB described above. If you want to understand how this is done, have a look at my interest turorial which is linked from my signature.

I suspect that the interest is correctly stated on your laon, it's just you haven't understood it.

More to the point, did you have PPI on the loan or other insurance. We now know that Welcome pay themselves a massive commission on insurance on their loans which they dodn't tell you about. This is very very naughty indeed and renders the loan void. Without prejudice to it being void, the loan amount, charge for credit and APR are also then all wrong, which would render the loan agreement unenforceable if it wasn't void.

Mortgage indemnity fee of £2750???

does this count, and how does it render it unenforceable?

many thanks,

I'm not sure about mortgage indemnity fees - do they count as insurance? who underwrites them, that is the question.

With 'proper' insurance, like PPI for example, Welcome act as insurance broker. As such they are allowed to pay themselves a commission but only if they tell you and you agree to it. If they don't tell you, it means the commission is secret and case law views that as a type of fraud. Given then that the agreement is fraudulent, it is void. That is, the agreements is deemed not to exist.

I found this. Have a look.

With my agreement my problem is also this:

I signed for a total amount of credit - £25000

the duration was 121 months

the payment was xxx

the interest rate was 14.00%

Yet,

I had my annual statment:

total amount of credit £27,985 (inc. MIF and acceptance fee)

a minimum duration term of 121 months

payments remained the same.

interest rate was 13.20%

SURELY UNENFORCEABLE?????

If so, How could I put this to a Judge - Politely

Many thanks,