Need Help With Interest Rate.

[apples333]

Hi all, I am new to this site which I must say is very good. I have been doing a lot of reading and would like some one who is good at working out interest rates. I have a un-regulated loan for over £35k and cannot work out the APR correctly myself and really appreciate anyone good with figures who could help me out. Is there anyone who is good at working out interest rates please on here? Loan is for £37,672.00 Repayments: 303 months 1st 3 months concessionary period 12 months £285.79 followed by 288 months of £335.79. The concessionary interest rate charged in the 1st 3 months will be 0.00%. After this period, there will be a discount of 2.00% off the annual nominal rate for 12 months giving a rate payable of 7.80%. When the discount period ends, we will charge interest at your annual nominal rate which is currently 9.80% for the remainder of the loan term. This is a monthly rate of 0.82%. I would appreciate any help in working the above out please. Thank you.

 

[David Griffiths]

If you have a loan, the documents must state the APR

I think that your best bet is to find a student as this sounds just the kind of question that gets set for homework.

 

[KDMINX]

By law the APR must be in VERY BIG font!

(technically one and a half times as big as anything else written on the page)

 

[apples333]

Thanks DG & KDMINX. The APR is not shown as BIG on my loan agreement if you could see this it is very very small print.

I am unable to find a student at present, and will keep trying and searching to see if I can find a way to work out the interest rate charged on my loan agreement.

KDMINX is there a reference to law where the APR must be in VERY BIG font please that I could check out?

 

[Tom Egerton]

How much is the loan for - £35,000 or £37,672?

Does the agreement state what the total repayments will be (by my calculation around £100K over 25 years)?

It may be possible to arrive at a rough APR with this information.

 

[thecyclingartist]

If I'm reading this right:
(I'm just good at maths, am not an accounting/econ person)

12 months * 285.79 = 3429.48
288 months * 335.79 = 96707.52
Total repayable: 100,137

Average APR of 5.9%? for term of 303 months (though technically the rate is changing at 3 months and 15 months.

based on the calculator about banking at about.com (search for APR calculator and you'll find it, the site won't let me post links yet)

Tina.

 

[Tom Egerton]

I make it around 12.2% but I'm happy to be corrected.

Interest paid over 25 years (actually 25.25 years) = £100,137 - £37,672 = £62,465 which is 166% on the amount borrowed or around 6.6% flat rate interest per year.

APR I think is roughly 2x - 1 where x = flat rate.

Or (2 x 6.6) - 1 = 12.2%.

 

[KDMINX]

KDMINX is there a reference to law where the APR must be in VERY BIG font please that I could check out?

Section 8 Part 5d of the consumer credit regulations seems to ring a bell

(It doesn't actually say "very big", rather that it has to be one and a half times the size of anything else on the page)

 

[apples333]

Thanks everyone that was excellent working out of the figures, I must admit I still have not got my head around them yet, but will keep trying.

My loan is for £37,672.00 thats with charges and fees added to it. I applied for £35,000.00, the £2672.00 are brokers fees, acceptance fees added to the £35k making it £37,672.00.

My loan agreement states that the interest rate loan is 9.8%, but if this is not the case then that means that the APR calculated on my loan agreement is incorrect.

Also the APR is not any bigger than any other figure or letters, all of it is the same size. As this is an unregulated loan I don't know what rules apply.

 

[apples333]

Section 8 Part 5d of the consumer credit regulations seems to ring a bell

(It doesn't actually say "very big", rather that it has to be one and a half times the size of anything else on the page)

Thanks KDMINX, I don't think my agreement will apply to the consumer credit section 8 part 5d as I took my loan out in Sept 07, do you think it still does apply please?

 

[apples333]

How much is the loan for - £35,000 or £37,672?

Does the agreement state what the total repayments will be (by my calculation around £100K over 25 years)?

It may be possible to arrive at a rough APR with this information.

Hi Tom, my agreement does not state what the total repayments will be.

 

[apples333]

How much is the loan for - £35,000 or £37,672?

Does the agreement state what the total repayments will be (by my calculation around £100K over 25 years)?

It may be possible to arrive at a rough APR with this information.

Hi Tom, my agreement does not state what the total repayments will be. The total loan is for £37,672.00.

 

[apples333]

I make it around 12.2% but I'm happy to be corrected.

Interest paid over 25 years (actually 25.25 years) = £100,137 - £37,672 = £62,465 which is 166% on the amount borrowed or around 6.6% flat rate interest per year.

APR I think is roughly 2x - 1 where x = flat rate.

Or (2 x 6.6) - 1 = 12.2%.

Thanks again Tom, so the 9.80% that the lender has states in my agreement is questionable then?

 

[KDMINX]

£2672.00 are brokers fees, acceptance fees added to the £35k making it £37,672.00.

That seems *VERY* high. the broker would have got commission from the loan company and they're charging you £2700 on top? Adding it to the loan means they would have got commission on their fees!

Thanks KDMINX, I don't think my agreement will apply to the consumer credit section 8 part 5d as I took my loan out in Sept 07, do you think it still does apply please?

As far as I remember the regs were last ammended in 2004, but I'm not an expert.

 

[apples333]

That seems *VERY* high. the broker would have got commission from the loan company and they're charging you £2700 on top? Adding it to the loan means they would have got commission on their fees!



As far as I remember the regs were last ammended in 2004, but I'm not an expert.

The brokers fee was 1750 and my lender also paid my broker a commission which I did not know about. Then there was acceptance fee of 595 and title insurance e.t.c.

All of these fees and charges were added to the £35k I applied for.

I will have a look at the regs, thanks for that

 

[KDMINX]

The brokers fee was 1750 and my lender also paid my broker a commission which I did not know about. Then there was acceptance fee of 595 and title insurance e.t.c.

All of these fees and charges were added to the £35k I applied for.

I will have a look at the regs, thanks for that

It all sounds like a *VERY* expensive loan to me!

Someone better at maths than I will no-doubt work out the total cost of all these fees after interest etc.

Did you realise you were paying over £100k for this loan?

 

[Williams lester]

It all sounds like a *VERY* expensive loan to me!

Someone better at maths than I will no-doubt work out the total cost of all these fees after interest etc.

Did you realise you were paying over £100k for this loan?

The cost will normally be proportionate to the risk...we have no idea what security the OP has given against this (if any) and what his credit file may be like!

 

[KDMINX]

The cost will normally be proportionate to the risk...we have no idea what security the OP has given against this (if any) and what his credit file may be like!

There may be a reason why the loan cost so much but that doesn't make it any less expensive!

 

[apples333]

There may be a reason why the loan cost so much but that doesn't make it any less expensive!

Thanks guys, this is a secured loan on my house, and yes I agree is very expensive but nowhere in my loan agreement does it state what the total amount repayable is.