Beware are you sure that your Welcome figures are Incorrect

[BEBOBEBO]

When i originally started my thread http://www.consumeractiongroup.co.uk/forum/welcome-finance/243520-welcome-finance-secured-loan.html I was informed that figures on my agreement had been mis-stated. 6 months later the FOS confirmed that my agreement was actually correct, May I also add I was told to put my "Account in Dispute" which I later was informed that as Welcome are not subscribed to Banking Code "Accounts in Dispute" do not apply. This left me 6 months in arrears.

 

I decided to then find out for myself what the interests rates were. I thought i had struck gold when i worked out the interest rate was 21.6% only to be told by WFS thru the fos that i was right but its the AIR.

 

Too many members on here are quick to quote complex caselaw yet they dont understand compound interest.

 

There is no easy way of explaining the Calculations and therefore its best you read up yourself.

 

On your agreement you have your APR, mostly everyone assumes this is the interest rate that works out the interest charged. But it doesnt.

 

The APR is based on the total charge for credit (TCC) which includes interest and other charges which affect the cost of borrowing - even if they are not payable under the credit agreement itself. The APR is an annualised rate reflecting the timing of such charges, as well as the rates and amounts. Credit charges and APR - The Office of Fair Trading

 

You then have your RATE OF INTEREST PER ANNUM. This is derived from your monthly flat. You can put your rate of interest into a converter calculator to find out your monthly rate.

Interest Rates Guide: Everything you ever wanted to know!...

 

I struggled original because i didnt understand this. I thought WFS has miscalculated my agreement using a completely different interest rate. It was only until i challenged this with the fos that i was told it was the correct rate because it uses the monthly rate. please see the attached letter http://i870.photobucket.com/albums/ab266/rottweilermick/Final%20Responses/Interestcalculations.jpg.

 

So you get your flate rate and work out your monthly rate. Then just x this by 12. This gives your interest rate that WFS use to work out the interest on agreement.

 

I read the OFT guide to APR you might find it usefull. I also read about flat rate and annual rate AIR .

 

Therefore if you have a flat rate of 23.87, it means your monthly interest rate is 1.8% If you times this by 12 it gives you 21.6% which is your AIR. Your Interest is calculated using the AIR Figure NOT your APR.

 

Please, all members check and double check all information you are given on here, because I can honestly say Im now in a worst off position then when I started.

 

Of course some members will doubt this post and all I can say is have your agreement checked over by a Professional and also ask yourself "How many Welcome agreements on here have been Proven to be unenforceble due to incorrect figures ?"

 

Bebo

 

P.S Site team can this be made "Sticky" ?

[beyondhope]

Fabulous post Bebo! Very helpful as I know many of us have 'unenforceable due to interest calculation' agreements mine too was proven to be fine but I wasnt given the same detail to share!

[Dibbothe3rd]

so what's the point of putting APR on the agreement and not even mentioning the AIR?

[BEBOBEBO]

so what's the point of putting APR on the agreement and not even mentioning the AIR?

 

The APR reflects the compound nature of the interest but it also includes other charges that make up the total cost of credit.

 

You (all) should note that you cannot work out the APR by hand or using a spreadsheet. It can only be calculated using a computer program. If you don't believe me, have a look at the OFT description of how to work it out - http://www.oft.gov.uk/shared_oft/bus...dit/oft144.pdf

 

As stated on your agreement Interest calculated using the RATE OF INTEREST PER ANNUM as expalined in the above post.

[Dibbothe3rd]

The link dont work.

 

I aware the APR can include other charges for that are included in the total cost of credit, however this may not be the case for all agreements.

 

for example, my APR as stated on the agreement is based on the "Total Amount of Credit" ie the value of vehicle + crappy Insurances. That's all, no other charges are included. its as simple as that.

 

Its actually easy to work out APR using excel functions =pmt and =rate. it might not be 100% accurate but it will certainly give you payments and APR rates within 1% or 2%

[Dibbothe3rd]

having said that and double checking mine, it appears that mine of 19.1% is incorrect based on my monthly repayments. I would have to be paying £7 a month more each month to have a correct APR of 19.1%. My APR should on my agreement should be 17.6% based on the repayments per my agreement. That's a big difference of 1.5%.

 

However if you are saying that the APR has nothing to do with the interest rate payable on the amount borrowed and that it includes other charges not payable and assumptions at the time the loan of HP etc.. was taken out, how come on my agreement there are no charges etc..yet when I plug the figures into the mercerhole calc Loan & APR Calculator the APR figure agrees?

 

the whole thing is very strange and what makes it more strange is that my "rate of interest on credit (per annum)" is 10% and does not calculate or agree to anything else.

 

seems to me that the agreements are balls as it does not show the correct interest rate payable. surely the interest rate is a prescribed term and how are we supposed to know this "flat rate" you speak of when it is not on the agreement and is never discussed when taking out loan or HP and is certainly never signed in agreement too?

 

not flaming, just trying to get to the bottom of all this and raising points for thought!! heh heh

[BEBOBEBO]

Dibbo

 

Do you have your agreement posted on your own thread so i can see what you reffering to. It just makes it easier for me to understand.

[BEBOBEBO]

@ Site Team, Have you had chance to look at this thread yet ?

[Dibbothe3rd]

yep, posted up on first page.

 

http://www.consumeractiongroup.co.uk/forum/welcome-finance/223490-welcome-employee-told-my.html

[BEBOBEBO]

Ok Dibbo.

 

I am going to be honest. I have never looked at an HP agreement and i am not sure if the same principles apply. The small print is different. So not sure about any figures. I tried to run some figures but no joy. That might just mean i dont know what i am looking for. I spent months looking at ineterst for fixed agreements, but not for HP. Sorry mate.

 

Beyond if you reading this your up on HP any help for dibbo.

[Dibbothe3rd]

I see what your saying, it appears that APR can be different for different types of agreements. A lot of the info I have found tend to be based on credit card agreements store cards etc...

 

Obviously APR on these two types is very hard to get right due to the usage and payments methods of the user. Therefore I would expect it to be incorrect.

 

However, on a fixed sum loan or HP, it should be relatively easy as nothing will change, re payments are the same and the interest rate should be fixed.

 

This is why I feel some people have a claim for incorrect APR on agreements and that when POST was working things out, he correctly (i think) stated that the repayment amounts were wrong. have proved to myself in above posts with the difference in APR of 1.5% which makes a difference of about £7 a month underpaid even though the agreement says different.

 

its all very confusing..

[tonycard]

very confusing Dibbo, Ive tried all ways on yours and mine agree with your £7 Im underpaying by £4 we must be missing something some where, I also believe bb right with loans worked out with AIR, and hp seems to be APR

[beyondhope]

Ok Dibbo.

 

I am going to be honest. I have never looked at an HP agreement and i am not sure if the same principles apply. The small print is different. So not sure about any figures. I tried to run some figures but no joy. That might just mean i dont know what i am looking for. I spent months looking at ineterst for fixed agreements, but not for HP. Sorry mate.

 

Beyond if you reading this your up on HP any help for dibbo.

 

Hi Bebo I most certainly am reading but its all a different language to me I cant do the calculations on my own let alone anyone elses although my HP is critically flawed to start with in that my total amount payable is actually over 3k less than the total amount of payments so I dont really stand much hope there

[Dibbothe3rd]

http://tinyurl.com/oft144-pdf

 

is the link bebo put in post #4 and this works ok.

 

the calculation for the APR on page 14 is very confusing, but if you search APR calcs for excel, it brings up quite a few, but again the website calcs give me different results to the excel ones. so no idea what is correct.

 

I have no idea what my monthly interest rate is and all i know is that I have a flat annual rate of 10%. does this apply to the HP or late payments or what??

[Dibbothe3rd]

Well I have figured out part of my interest calcs and the flat annual rate of 10%.

 

If you take the total interest and divide it by the actual loan or HP amount, it will give you a 0.x number. Times this number by 100 will give you the total interest % in relation to the amount borrowed. ie I get 0.4 so x 100 = 40%. Now divide this the number of years (4 in my case) and I get 10%. This is my flat annual rate as per my HP agreement. 10% divided by 12 = 0.83% per month. That should be the compounded interest rate used by welcome each month.

 

im getting there, but now I just need to tie this up to the APR as per my agreement and the figure calculated using the =rate function.