Is Rule of 78 Still Legal?

mpeard

For some reason I thought the law had changed and this was no longer allowed to calculate interest on an early settlement. It seems Barclaycard are using it to provide me with a settlement figure on a loan which was taken out in June of this year.

Any advice?

Mark

CLAPTON

why do you think they are using rule 78?

mpeard

CLAPTON wrote: »

why do you think they are using rule 78?

Money required works out as it would with this rule.

Mark

CLAPTON

all new loans regulated by the CCA (basically unsecured loans under 25k) must use the new CCA rules and not rule 78.

is it a 'normal' personal loan (not HP, car lease etc)

can you give the figures
-amount borrowed
-APR
-period of loan
-monthly repayment
- settlement figure quoted
- how many payments made
-any PPI.. if so the details

mpeard

CLAPTON wrote: »

all new loans regulated by the CCA (basically unsecured loans under 25k) must use the new CCA rules and not rule 78.

is it a 'normal' personal loan (not HP, car lease etc)

can you give the figures
-amount borrowed
-APR
-period of loan
-monthly repayment
- settlement figure quoted
- how many payments made
-any PPI.. if so the details

£16k loan over 5 years at 9.5% APR. £336.20 per month 6 payments made. Settlement £14971. No PPI.

Thanks

CLAPTON

Under the CCA rules that seems approximately correct.

Although I can't work it out exactly it look like this.
Basically for the early months, of your 336 per month payment about 120 is interest and the rest in capital repayments so after 6 payments the capital remaining would be about 14,700 approximately.
Under CCA rules they can add up to 2 months interest so a figure of 14,971 is reasonable.