Consumer Credit act 1974

Matt1982

I know this is tech not in the right section but at the same time Im hoping I can get some help here.

Can someone confirm for me how overpayment on a loan under the consumer credit act 1974 should be applied to me account. Should any overpayment be applied to the capital amount outstanding so in effect reducing the interest payable?

thanks in advance

ACG

It depends on your loan.

For instance some mortgages will apply payments to the account to reduce the amount outstanding but interest will not be ammended until the end othe year, or end of the month depending on when/who the mortgage was take out with. Some will also charge a fee for doing so.

It has nothing to do with the consumer credit act as far as im aware its down to each individual contract.

What does the paperwork say?

Matt1982

Hi
Thanks for your response. The section about early repayment says exactly this:-

'you have the right to bring this Agreement to an end at any time by notifying us and making a payment of the outstanding balance plus all future monthly repayments less a rebate calculated under a formula in regulations made under the consumer credit act 1974.

You can also make partial early repayment at any time by notifying us. If you do we will apply the above method for total early repayment pro rata to the amount repaid early. we will adjust the remaining loan term to reflect the payment'

Thank you

ACG

You can also make partial early repayment at any time by notifying us. If you do we will apply the above method for total early repayment pro rata to the amount repaid early. we will adjust the remaining loan term to reflect the payment'

What does it say about the above method? Is there any calculation anywhere prior to that sentence?

Matt1982

Doesn't same anything above that.

So I took it to mean that any overpayment i make is worked in line with the CCA1974.

:-(

Matt1982

Just being going through my emails, a few weeks ago I asked the loan company about overpayments and if limited to how much i could make.

I got told

'There is not a limit on overpayments however if you pay more than £300 in one go there will be an additional charge of 1 mths interest applied to the overpayment. this equates to around 3%'

Dont know if this helps you helping me.....thanks

ACG

Im not sure...I'll be interested in seeing other peoples responses.

Thrugelmir

[QUOTE=Matt1982;52903677Should any overpayment be applied to the capital amount outstanding so in effect reducing the interest payable?

[/QUOTE]

It will reduce the capital balance owing.

However there will be an early repayment charge levied.

Until the Consumer Act of 1974 the redemption charge was calculated under what Accountants refer to as the rule of 78.

From web 2011 the rules changed and the calculation is based on an actuarial calculation.