"rule of 78"

amwynn2

I have just received my SAR from Welcome Finance and I notice a term rule of 78, this being how they calculated my redemption figure. As I am not a lawyer I don't know how to apply this rule and how I could work it out myself.I remember querying my redemption figure at the time and was told the computer did it but I now realise they were just fobbing me off. Can you please explain in simple laymen's term what it means. My loan was settled in Oct.04
Thank you
amwynn2

maxdp

amwynn2 wrote: »

I have just received my SAR from Welcome Finance and I notice a term rule of 78, this being how they calculated my redemption figure. As I am not a lawyer I don't know how to apply this rule and how I could work it out myself.I remember querying my redemption figure at the time and was told the computer did it but I now realise they were just fobbing me off. Can you please explain in simple laymen's term what it means. My loan was settled in Oct.04
Thank you
amwynn2

Hi There
Hopefully Marshallka will be able to help you here she will be able to explain Rule of 78

di3004

amwynn2 wrote: »

I have just received my SAR from Welcome Finance and I notice a term rule of 78, this being how they calculated my redemption figure. As I am not a lawyer I don't know how to apply this rule and how I could work it out myself.I remember querying my redemption figure at the time and was told the computer did it but I now realise they were just fobbing me off. Can you please explain in simple laymen's term what it means. My loan was settled in Oct.04
Thank you
amwynn2

Hi amwynn

I have not got a clue to be honest, but Marshallka is good with this type of thing, hopefully when she has some time she will post to give you more of an idea of this, good luck.;)

di3004

lol SNAP Max lmao :rotfl::rotfl::rotfl::rotfl::rotfl:

maxdp

:T

di3004 wrote: »

lol SNAP Max lmao :rotfl::rotfl::rotfl::rotfl::rotfl:

Tee Hee
:rotfl:

di3004

maxdp wrote: »

:T
Tee Hee
:rotfl:

lol:rotfl::rotfl:, posted exactly the same time with the same response, so funny, but its true, I am hopeless at calculations and I also find the "Rule of 78" very confusing.

marshallka

amwynn2 wrote: »

I have just received my SAR from Welcome Finance and I notice a term rule of 78, this being how they calculated my redemption figure. As I am not a lawyer I don't know how to apply this rule and how I could work it out myself.I remember querying my redemption figure at the time and was told the computer did it but I now realise they were just fobbing me off. Can you please explain in simple laymen's term what it means. My loan was settled in Oct.04
Thank you
amwynn2

The rule of 78 was a method of calculating a settlement on a loan before the new method of calculating settlements was introduced in 2004. I cannot explain it but I can say that it was unfair and oppressive to the consumer and only fair to the lenders etc and can be challenged in courts. It treated the interest on the loan and PPI as front loaded so you actually pay off the interest more in the beginning of the loan and hardly anything off the capital.

There is a calculator whereby you can check the calculation of your settlement here


http://brian-stewart.orpheusweb.co.uk/credit/javascript/equalr78-prr.htm

If you had PPI on your loan too and the rule of 78 was used on the whole loan (which includes your PPI) then you can often pay a lot more in settlement than using the newer method introduced in 2004 for early settlements.

I cannot explain it really as I would have to be a lawyer myself and even bank workers etc cannot really explain its method. It was actually abolished because it always worked out totally unfair.

Emmzi

http://www.home.co.uk/guides/loan_glossary.htm?rule explains what it is