what if the APR is wrong on an agreement

[bengateway]

Just used the loan calculator and it seems the APR is wrong following a cca request ?

 

What do you guys think :-?:-?

Edited December 2, 2009 by bengateway

[42man]

Have a look here - http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/235207-masterloan-cca-need-opinion.html#post2607171

 

And this should help

 

CCA RULES FOR PRESCRIBED TERMS

CONSUMER CREDIT ACT

8.2 What if prescribed terms are missing or incorrect?

 

s127(3) provides that the court may not make an enforcement order unless a document containing all the prescribed terms of the agreement was signed by the debtor – see Q1.21.

 

If therefore any of the prescribed terms is missing, or incorrect, the agreement is not enforceable against the debtor, and the court is precluded from making an enforcement order.

 

 

8.3 What are the prescribed terms?

 

The prescribed terms specified in Sch 6 are as follows:

 

* amount of credit – see Q8.

 

* credit limit – see Q8.5

* repayments – see Q8.9.

* rate of interest – see Q8.6

 

Sch 6 was not amended by the 2004 Regulations.

IS MY AGREEMENT ENFORCEABLE( Via section 127(3) CCA1974)

PRESCRIBED TERMS FOR THE PURPOSES OF SECTIONS 61(1)(0) AND 127(3) OF THE

CONSUMER CREDIT ACT 1974 Taken from sced.6(1983/1553) regulations

(If you just want to find out, skip the bits in between the stars it’s just some extra information)

 

**What do we mean by unenforceable?

In the Consumer Credit Act section 127 there is a provision for making an agreement unenforceable if it does not contain certain pieces of information.

Subsections 1,2,3,4 state which pieces of information these are, and everything mentioned there must be included within the body of the agreement, if one is missing the agreement is unenforceable.

 

How does unenforceable differ from enforceable with a court order only?

When an agreement is unenforceable it means that the court or the judge cannot make a ruling on it. The court cannot make it enforceable.

When an agreement is enforceable only by ruling of the court it means that the agreement can be stopped by the debtor but the court has the power to re-instate it and allow the credit to continue to enforce.**

 

The Prescribed Terms are these

 

A Amount of credit

A term stating the amount of credit

 

B Repayments

A term stating how the debtor is to discharge his obligations under the agreement to make the repayments, which may be expressed by reference to a combination of any of the following-

(a) Number of repayments;

(b) Amount of repayments;

© Frequency and timing of repayments;

(d) Dates of repayments;

(e) The manner in which any of the above may be determined; or in any other way, and any power of the creditor to vary what is payable.

 

C Rate of interest

A term stating the rate of interest to be applied to the credit issued under the agreement

D Credit limit

This may be a term or the manner in which it will be determined or that there is no credit limit.

--------------------------

 

Which of these applies to you depends on the type of agreement you have?

 

For a Running Account (credit card) agreement

 

BC and D Apply

 

For a Restricted Use Debtor Creditor Supplier

• Where the dealer is the supplier and the creditor is the one providing the finance.
  
• The money can only be used for the purpose it is given.
  
• There is no interest on the purchase (the cash price is the same as the total price)
  
• And there is no advance payment
  

A is applicable

 

For a fixed Sum Credit Agreement

A conventional credit agreement with none of the above restrictions

 

A and B apply

 

For a Hire Agreement

 

B is Applicable

 

This paper only covers section 127(3) of the Act agreements can also be unenforceable by contravention of sections 1 and4 this will be the subject of the next paper.

Please note that these Prescribed terms where not changed in any way by the 2004/1482 Ammendments although the form in which they appear on the agreement was. Subsection127(3) was repealed on the 6th of April 2007 so that unenforceability due to 127(3) will only apply to agreements executed before that date.

[bengateway]

Thanks for the reply 42man.

 

So the interest rate is not a prescribed term, and if it has been incorrectly calculated, it wont effect the enforcability of the cca on its own merit.

 

Thanks once again, I really feel this site has done so much to help people your the best.

Edited December 2, 2009 by bengateway

[bengateway]

Found this on a well known site and it seems to contradict what I thought you were saying 42man am I missing the point somewhere, sorry to appear dense on this one.

Is your credit agreement challengeable?

Any credit agreement, for example credit cards, loans and catalogue agreements signed before 6 April 2007 has to adhere to a strict format set by the Consumer Credit Act. If this format is not followed you can challenge the enforceability of the agreement with your lender. Examples of errors include signatures and contact details missing from the paperwork and incorrect APR calculations.

[paulwlton]

I believe the APR isn't a prescribed term in relation to fix rate agreements.

 

PW

[bengateway]

So would this not apply to a fixed rate agreement Paul

 

A term stating the rate of any interest on the credit to be provided under the agreement and A term stating how the debtor is to discharge his obligations under the agreement to make the repayments, which may be expressed by reference to a combination of any of the following—

 

1.Number of repayments;

2.Amount of repayments;

3.Frequency and timing of repayments;

4.Dates of repayments;

5.The manner in which any of the above may be determined; or in any other way, and any power of the creditor to vary what is payable

[bengateway]

This seems to refer to the APR being a prescribed term also :confused:

Where am I going wrong

 

Sorry it was before 1.5.1998 in my case.

 

http://www.consumeractiongroup.co.uk/forum/general-debt-issues/101230-cca-what-prescribed-terms.html

[paulwlton]

My understanding is that if the APR is out of tolerance it will amount to a breach of schedule one not six unless the agreement falls within 9 (a)©

 

 

Total charge for credit, rate of interest, etc.

[9. Agreements for fixed-sum credit except

agreements--

(1) The total charge for credit, with a list of its

constituent parts.

(a) which do not specify either the intervals

between repayments or the amounts of repayments

or both the intervals and the amounts;

(2) The rate of interest on the credit to be

provided under the agreement or, where more

than one such rate applies, all the rates in all

cases quoted on a per annum basis with details of

when each rate applies.

(b) under which the total amount payable by the

debtor to discharge his indebtedness in respect of

the amount of credit provided may vary according

to any formula specified in the agreement having

effect by reference to movements in the level of

any index or to any other factor;

(3) A statement explaining how and when

interest charges are calculated and applied under

the agreement.]

© which provide for a variation of, or permit

the creditor to vary, (whether or not by reference to

any index) the amount or rate of any item included

in the total charge for credit after the relevant date;

[exasperated]

Paul,

Could you clarify this then if you have an agreement where the APR is quoted at say 21.8 apr and then the payments fluctuate with the base rate is that considerd fixed?

[paulwlton]

Paul,

Could you clarify this then if you have an agreement where the APR is quoted at say 21.8 apr and then the payments fluctuate with the base rate is that considerd fixed?

 

IMO, this would constitute a variable rate loan therefore the Interest rate would need to be stated as per schedule 6.

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