How to calculate a loan interest precisely ?

siha

Hi All,
In 2017 I had a 15K loan from Sainsbury's which advertised for 2.8%APR but they pushed it up to 8.1% for 3 years which they deferred the payment to two months later ( I did not ask for it ) and I thought it was free as they said it's 36 payments ( good trick for my ignorant ) with payment of £474.88pcm.which I, as same as many people, put my faith on their calculation.
I then later found that on the Money Supermarket site show the same loan with the same APR with the repayment of £468.76
So I queried with Sainsbury's, asked for a full breakdown of the interest charged and how they calculated differently ? lt took me over 6 months to get their response which they just offered £50 compensation for the delay in response, denied of any hidden charges ( PPI which I thought it might be ) but did not give any calculation formula.
I then complained to FOS in Oct 2020 and waited till Nov 2021, the Investigator from FOS got allocated and he agreed with the Sainsburys' decision but still did not show how the interest was calculated differently.
I now realise that when you are not in the profession ( expert ) of any kind, you are easily deceived by those professionals as they use their profession to cover their own faults or overcharge you.
I would be grateful if any experts could give the exact formula or explain of the different payment from lenders above.

Thank you all in advance
 
 
  

HeinzVarieties

siha said:

Hi All,
In 2017 I had a 15K loan from Sainsbury's which advertised for 2.8%APR but they pushed it up to 8.1% for 3 years which they deferred the payment to two months later ( I did not ask for it ) and I thought it was free as they said it's 36 payments ( good trick for my ignorant ) with payment of £474.88pcm.which I, as same as many people, put my faith on their calculation.
I then later found that on the Money Supermarket site show the same loan with the same APR with the repayment of £468.76
So I queried with Sainsbury's, asked for a full breakdown of the interest charged and how they calculated differently ? lt took me over 6 months to get their response which they just offered £50 compensation for the delay in response, denied of any hidden charges ( PPI which I thought it might be ) but did not give any calculation formula.
I then complained to FOS in Oct 2020 and waited till Nov 2021, the Investigator from FOS got allocated and he agreed with the Sainsburys' decision but still did not show how the interest was calculated differently.
I now realise that when you are not in the profession ( expert ) of any kind, you are easily deceived by those professionals as they use their profession to cover their own faults or overcharge you.
I would be grateful if any experts could give the exact formula or explain of the different payment from lenders above.

Thank you all in advance
 
 
  

Give us the FOS DRN so we can see why they agreed with Sainsbury's.

Also, a loan calculator for 8.1% APR with a £15k loan over 3 years gives a figure of £468.76. The interest was not "pushed up" to 8.1%, you were not eligible for the headline rate.

I suspect you requested a payment holiday inadvertently which is why your payment was a little higher than the amount required to pay it off at the interest rate you were offered.

Pixie5740

siha said:

Hi All,
In 2017 I had a 15K loan from Sainsbury's which advertised for 2.8%APR but they pushed it up to 8.1% for 3 years which they deferred the payment to two months later ( I did not ask for it ) and I thought it was free as they said it's 36 payments ( good trick for my ignorant ) with payment of £474.88pcm.which I, as same as many people, put my faith on their calculation.
I then later found that on the Money Supermarket site show the same loan with the same APR with the repayment of £468.76
So I queried with Sainsbury's, asked for a full breakdown of the interest charged and how they calculated differently ? lt took me over 6 months to get their response which they just offered £50 compensation for the delay in response, denied of any hidden charges ( PPI which I thought it might be ) but did not give any calculation formula.
I then complained to FOS in Oct 2020 and waited till Nov 2021, the Investigator from FOS got allocated and he agreed with the Sainsburys' decision but still did not show how the interest was calculated differently.
I now realise that when you are not in the profession ( expert ) of any kind, you are easily deceived by those professionals as they use their profession to cover their own faults or overcharge you.
I would be grateful if any experts could give the exact formula or explain of the different payment from lenders above.

Thank you all in advance
 
 
  

The load was advertised with a representative APR of 2.8% but you were not eligible for the rate so were offered a loan with an APR of 8.1% instead which you accepted.  Your loan starts accruing interest from day 1 and interest is calculated daily so during the two months where payments were being deferred the loan would have been accruing interest with no money being paid off the capital.

If you want to calculate the interest exactly you would need to build your own model calculating interest daily as most/all of the online calculators calculate interest monthly rather than daily which will get you close but not as exact as you want since the number of days in a month varies.  Your monthly repayment figure of £474.88 with a 2 month payment holiday at the start looks about right though.

redux

I reckon the rate is around 7.81%, which would tally with the £468.76, and also with adding about £193 interest for 2 months deferment then 36 payments.

Thrugelmir

The two month deferment at the outset results in a higher interest charge than a loan that is repaid one month in arrears. That will account for the difference between the two amounts you quote. 

siha

HeinzVarieties said:

siha said:

Hi All,
In 2017 I had a 15K loan from Sainsbury's which advertised for 2.8%APR but they pushed it up to 8.1% for 3 years which they deferred the payment to two months later ( I did not ask for it ) and I thought it was free as they said it's 36 payments ( good trick for my ignorant ) with payment of £474.88pcm.which I, as same as many people, put my faith on their calculation.
I then later found that on the Money Supermarket site show the same loan with the same APR with the repayment of £468.76
So I queried with Sainsbury's, asked for a full breakdown of the interest charged and how they calculated differently ? lt took me over 6 months to get their response which they just offered £50 compensation for the delay in response, denied of any hidden charges ( PPI which I thought it might be ) but did not give any calculation formula.
I then complained to FOS in Oct 2020 and waited till Nov 2021, the Investigator from FOS got allocated and he agreed with the Sainsburys' decision but still did not show how the interest was calculated differently.
I now realise that when you are not in the profession ( expert ) of any kind, you are easily deceived by those professionals as they use their profession to cover their own faults or overcharge you.
I would be grateful if any experts could give the exact formula or explain of the different payment from lenders above.

Thank you all in advance
 
 
  

Give us the FOS DRN so we can see why they agreed with Sainsbury's.

Also, a loan calculator for 8.1% APR with a £15k loan over 3 years gives a figure of £468.76. The interest was not "pushed up" to 8.1%, you were not eligible for the headline rate.

I suspect you requested a payment holiday inadvertently which is why your payment was a little higher than the amount required to pay it off at the interest rate you were offered.

Thanks for your response, Heinz.
What is DRN ? The Investigator said he agreed with Sainsbury's in principle after checking on the T & Cs of the loan and said that the £50 offer from Sainsburys was reasonable.
I did not request any holiday payment. It was just in the T & Cs which I did not realise the interest to be included.for that two extra months.
After all, I just requested for the interest calculation breakdown & formula. Have I no rights for the breakdown to justify the lender's calculation / charges ? 

  

siha

Pixie5740 said:

siha said:

Hi All,
In 2017 I had a 15K loan from Sainsbury's which advertised for 2.8%APR but they pushed it up to 8.1% for 3 years which they deferred the payment to two months later ( I did not ask for it ) and I thought it was free as they said it's 36 payments ( good trick for my ignorant ) with payment of £474.88pcm.which I, as same as many people, put my faith on their calculation.
I then later found that on the Money Supermarket site show the same loan with the same APR with the repayment of £468.76
So I queried with Sainsbury's, asked for a full breakdown of the interest charged and how they calculated differently ? lt took me over 6 months to get their response which they just offered £50 compensation for the delay in response, denied of any hidden charges ( PPI which I thought it might be ) but did not give any calculation formula.
I then complained to FOS in Oct 2020 and waited till Nov 2021, the Investigator from FOS got allocated and he agreed with the Sainsburys' decision but still did not show how the interest was calculated differently.
I now realise that when you are not in the profession ( expert ) of any kind, you are easily deceived by those professionals as they use their profession to cover their own faults or overcharge you.
I would be grateful if any experts could give the exact formula or explain of the different payment from lenders above.

Thank you all in advance
 
 
  

The load was advertised with a representative APR of 2.8% but you were not eligible for the rate so were offered a loan with an APR of 8.1% instead which you accepted.  Your loan starts accruing interest from day 1 and interest is calculated daily so during the two months where payments were being deferred the loan would have been accruing interest with no money being paid off the capital.

If you want to calculate the interest exactly you would need to build your own model calculating interest daily as most/all of the online calculators calculate interest monthly rather than daily which will get you close but not as exact as you want since the number of days in a month varies.  Your monthly repayment figure of £474.88 with a 2 month payment holiday at the start looks about right though.

Hi Pixie5740,
Do you think they would believe on your own calculation / formula ? If you are not an accountant or working in the same sector as theirs.
I did not ask for the 2 months payment holiday. They just created it themselves, may be to get more money from customers.
I expected the Sainsburys would be able to provide the calculation breakdown as they have calculated the interest charges. Why could they not justify my query ?   

HeinzVarieties

siha said:

HeinzVarieties said:

siha said:

Hi All,
In 2017 I had a 15K loan from Sainsbury's which advertised for 2.8%APR but they pushed it up to 8.1% for 3 years which they deferred the payment to two months later ( I did not ask for it ) and I thought it was free as they said it's 36 payments ( good trick for my ignorant ) with payment of £474.88pcm.which I, as same as many people, put my faith on their calculation.
I then later found that on the Money Supermarket site show the same loan with the same APR with the repayment of £468.76
So I queried with Sainsbury's, asked for a full breakdown of the interest charged and how they calculated differently ? lt took me over 6 months to get their response which they just offered £50 compensation for the delay in response, denied of any hidden charges ( PPI which I thought it might be ) but did not give any calculation formula.
I then complained to FOS in Oct 2020 and waited till Nov 2021, the Investigator from FOS got allocated and he agreed with the Sainsburys' decision but still did not show how the interest was calculated differently.
I now realise that when you are not in the profession ( expert ) of any kind, you are easily deceived by those professionals as they use their profession to cover their own faults or overcharge you.
I would be grateful if any experts could give the exact formula or explain of the different payment from lenders above.

Thank you all in advance
 
 
  

Give us the FOS DRN so we can see why they agreed with Sainsbury's.

Also, a loan calculator for 8.1% APR with a £15k loan over 3 years gives a figure of £468.76. The interest was not "pushed up" to 8.1%, you were not eligible for the headline rate.

I suspect you requested a payment holiday inadvertently which is why your payment was a little higher than the amount required to pay it off at the interest rate you were offered.

Thanks for your response, Heinz.
What is DRN ? The Investigator said he agreed with Sainsbury's in principle after checking on the T & Cs of the loan and said that the £50 offer from Sainsburys was reasonable.
I did not request any holiday payment. It was just in the T & Cs which I did not realise the interest to be included.for that two extra months.
After all, I just requested for the interest calculation breakdown & formula. Have I no rights for the breakdown to justify the lender's calculation / charges ? 

  

A DRN is the decision number given by the FOS for each case they investigate.

If you provide this we can at least understand where the Ombudsman was coming from.

It's essentially a serial number for FOS cases.

siha

Thank you all for your response.
I accept of my ignorant to fall into the lender's trap ( was in desperate need to consolidate my debt ) and put it as a learning experience.
But I  just could not help to wonder why the Sainsburys interest charges was more than others on the same terms, interest & amount of loan ? If they could workout the charges then why could they not justify their own calculation / formula ? 
I just feel sorry to people who have had some shark loan interest whilst they are in hardship, struggle with high interest payment.
This MSE site & forum are very useful to help people save a lot of money but at the same time, banks/ lenders/ and insurance companies are mercilessly preying on people who are unfortunately to rely on them to survive, to live, 

redux

I don't think the charges are higher, or a shark rate.

The issue is that the payments started two months later, which you hadn't realised, and that they charged the same rate of interest for these two months, thus rolling it up to the effect of a larger loan starting from that point, hence the slightly higher monthly payment to cover it.

It seems the Ombudsman decision has reached an opinion that these terms were correctly stated, though you hadn't noticed.

siha

HeinzVarieties said:

siha said:

HeinzVarieties said:

siha said:

Hi All,
In 2017 I had a 15K loan from Sainsbury's which advertised for 2.8%APR but they pushed it up to 8.1% for 3 years which they deferred the payment to two months later ( I did not ask for it ) and I thought it was free as they said it's 36 payments ( good trick for my ignorant ) with payment of £474.88pcm.which I, as same as many people, put my faith on their calculation.
I then later found that on the Money Supermarket site show the same loan with the same APR with the repayment of £468.76
So I queried with Sainsbury's, asked for a full breakdown of the interest charged and how they calculated differently ? lt took me over 6 months to get their response which they just offered £50 compensation for the delay in response, denied of any hidden charges ( PPI which I thought it might be ) but did not give any calculation formula.
I then complained to FOS in Oct 2020 and waited till Nov 2021, the Investigator from FOS got allocated and he agreed with the Sainsburys' decision but still did not show how the interest was calculated differently.
I now realise that when you are not in the profession ( expert ) of any kind, you are easily deceived by those professionals as they use their profession to cover their own faults or overcharge you.
I would be grateful if any experts could give the exact formula or explain of the different payment from lenders above.

Thank you all in advance
 
 
  

Give us the FOS DRN so we can see why they agreed with Sainsbury's.

Also, a loan calculator for 8.1% APR with a £15k loan over 3 years gives a figure of £468.76. The interest was not "pushed up" to 8.1%, you were not eligible for the headline rate.

I suspect you requested a payment holiday inadvertently which is why your payment was a little higher than the amount required to pay it off at the interest rate you were offered.

Thanks for your response, Heinz.
What is DRN ? The Investigator said he agreed with Sainsbury's in principle after checking on the T & Cs of the loan and said that the £50 offer from Sainsburys was reasonable.
I did not request any holiday payment. It was just in the T & Cs which I did not realise the interest to be included.for that two extra months.
After all, I just requested for the interest calculation breakdown & formula. Have I no rights for the breakdown to justify the lender's calculation / charges ? 

  

A DRN is the decision number given by the FOS for each case they investigate.

If you provide this we can at least understand where the Ombudsman was coming from.

It's essentially a serial number for FOS cases.

Hi Heinz,
I have the FOS ref. as  PNX-3905523-J5X9. Would this be DRN ?