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Welcome Finance- is this true?


angel17
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Hi all

Have read somewhere that with regards to the acceptance fee (75), the fact that they charge interest on it is unlawful.

 

I have just looked at my one and only recent statement of demands and needs and have noticed the breakdown suggests that I am paying £3.75 per month for this, which equates to £135 and not the original £75 which I thought was to be accepted on to the loan. Having looked at the back of the agreement it states that 'the acceptance fee is for credit counselling providing long and short term plans for the course of the loan. Phoned the local branch, the adviser insisted it was for Administration and refuted the idea of credit counselling- he was extremely flustered. Noticed that the acceptance fee for the car was not applied a year later in 2007????

 

Have also noticed that they have added capitalisation- interest each month too!

 

Have recently sent them a complaint regarding misselling of lifecare and accident plan for the joint loan ( where my husband had this applied only) so will have to wait.

 

Thanks in advance every one!!

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Thanks andie303 it states that interest will be calculated at the rate of interest on the daily balance outstanding of the total amount of credit and the acceptance fee.

 

Think I was just suspcious after ringing them and them stating it as being administrative charge, where as on back of agreement it states for credit counselling etc.

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I am pretty sure that the admin fee cannot be part of the loan., ie part of the amount they charge interest on. What is confusing is that an admin fee can be spread across the period of the loan but it must not be part of the amount that goes into the calculation of APR. Having said that, it is not straightforward to determine whether they have included it or not. What you have to do is to calcualte the APR with and without the fee and see whaich they actually used.

 

 

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Steven as the acceptance fee is £75 (generally) the APR calculators show only a negligable difference both with and without it so I'n not 100% sure if it has or has not been added in.

 

However I did clarify what Welcome told me with FOS and they told me on the face of things Welcome are correct in what they say as long as it is written on the agreement and it not in any smaller font than the other t&c's

 

I've got it in my small claims action anyway so I can see what the judge says - I'm throwing everything and the kitchen sink at the at the moment :)

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Thanks for the advice so far! I have two apr rates on the agreement 60.70% and 55.5% which one should I use to work out the difference. Am a little confused why there are two different rates.

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I am pretty sure that the admin fee cannot be part of the loan., ie part of the amount they charge interest on. What is confusing is that an admin fee can be spread across the period of the loan but it must not be part of the amount that goes into the calculation of APR. Having said that, it is not straightforward to determine whether they have included it or not. What you have to do is to calcualte the APR with and without the fee and see whaich they actually used.

 

 

Just to pick up on the above advice - the APR must be calculated to reflect ALL interest and charges that are present within the agreement. Most APR calculators work this out by looking and the monthly payment x the term minus the original net loan amount. The difference is the total charges (whether interest is added to the fee or not). Provided the APR is calculated on the total charge then it will be correct.

 

The difference in Wilson v First County Trust was that the lender added the fee to the actual cash loan amount. This had two effects. 1) the APR would have been miscalculated because the fee would not have classed as part of the total charge for credit, because it was included in the net loan amount and 2) the amount of credit was therefore mis-stated, making the agremeent unenforceable.

 

Hope this help to clear up some of the regular questions I see on here.:)

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Thanks for the that!

 

For a joint loan of £1855 which includes (missold) lifecare and accident plan:

Without fee it is £2980.09 and with £ £3101.51

 

This makes the fee £121.42 which makes the fee £3.37 a month.

 

However, on statement of needs it says £3.83 a month

Rate of interest 3.75

 

Not sure what to make of it

 

 

 

on front agreement rate of interest per annum is 55.5% and on statement of needs, rate of interest is 3.75 per month- therefore 45% per annum?

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Well,

 

121.42 paid as 36 payments of 3.83 is a nominal interest rate of 8.44% (APR 8.8%)

 

1855 as 36 payments of 76.61 is a nominal interest rate of 27.88% (APR 31.7%)

 

2980.09 as 36 paymnets of 94.74 (76.61+18.13) is 8.98% (APR 9.4%)

 

Something is a bit odd

 

 

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It's just the numbers don't seem to add up but I may have msiunderstood what you ar saying. Is there any chance that you could post up the agreement (personal details removed)?

 

 

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hi angel

 

sorry i can't see the figures

 

can you tell me number of repayments, total amount of credit inc interest, loan amount no interest, APR % and monthly payment and I will check for you

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Thanks

 

On the agreement:

 

Total amount of credit (inc insurance) is £1855

Total charge for credit £1693.39 consisting of £75 fee

 

Rate of interest per annum 55.5% and apr 60.70% payable over 36 months from aug 06.

 

On the statement of needs

 

Rate of interest 3.75% acceptance fee £3.83 per month

Price of insurance £355 with an interest of £297.68

 

The monthly repayment is £98.57 breaking down to:

 

£76.61 cash advance

£3.83 for acceptance fee

£18.13 for insurances

Edited by angel17
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