The Interest Savers

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AS SEEN ON NATIONAL TELEVISION
OVER 60 TIMES

"Programs that make it easy to check your
Bank Statement"

FIRST IN THE WORLD made available to bank customers
Appeared 3 times on front cover of MONEY MAGAZINE

COMMON AREAS OF LENDERS’ MISTAKES 7/2/2007

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COMMON AREAS OF LENDERS’ MISTAKES

LENDERS DO MAKE MISTAKES

THERE ARE 24 MAIN AREAS WHERE THEY MAKE MISTAKES

HUMAN ERROR AND COMPUTER ERROR ARE THE MAIN REASONS

RARELY DO CUSTOMERS CHECK INTEREST CALCULATIONS

INTEREST ON YOUR LOANS IS USUALLY YOUR BIGGEST EXPENSE

We suggest that you pay special attention to the following areas when checking your bank statements and when dealing with financiers:

1. The Original Calculation of your Repayment Amount was incorrect e.g.. a client‘s repayments were $19. 00 per month more than they should have been ... for 22 years ( if not discovered this could have resulted in the customer paying an extra $15, 800 based on an interest rate of 9% p.a. ).

2. The Incorrect Interest Rate was Applied
e.g.. 7.75% was used instead of 7.25%. ( if not discovered this would result in the customer paying an extra $9, 760 + in additional interest ). See Sample Statement No. 3

3. The Interest was Charged at least one day early. This could cost the customer thousands of dollars in extra interest over the life of the loan. There have been many cases of this happening.

The Interest Charge was calculated on an Incorrect Balance.
4. e.g. the loan balance used was $ 110,000 but the loan balance should have been $ 101,000.
5. This could cost the customer an extra $20, 000 + over the life of the loan.

6. 5 Interest Rate Changes :
i. The new ‘lower’ rate was applied one month late
ii. The new ‘higher’ rate was applied one month early
7. This could cost the customer thousands of dollars in additional interest over the life of the loan.
8. There have been many cases of this happening.

9. 6 A Payment was Credited at least one day late.
10. This would cost the customer thousands of dollars in additional interest over the life of the loan.
11. There have been many cases of this happening.

12. 7 Bank Charges are Too High or include extra charges.
13. Customers have discovered extra fees of up to several thousand dollars incorrectly charged to their accounts.
14. A journalist from a major newspaper decided to check and discovered $650 in bank fees that were not hers.

15. 8 Leap Year : 365 days used by the financier instead of 366 days when calculating interest.
16. The financiers ‘reap’ additional hundreds of millions of dollars from accounts every four years and then lend it back to customers.

9 Incorrect Dates are used when calculating interest.
17. i.. the Interest Debit is calculated on the ‘daily balance’ one or two days prior to
2 the date appearing on the statement. i.e. the financier charges additional interest
18. ii.. the Interest Credit is calculated on the ‘daily balance’ one or two days after the
2 date appearing on the statement. i.e. the financier pays less interest.

19. 10 An Incorrect Amount is Credited (Debited) to the account.
20. e.g. $17. 50 is credited to your account instead of $175. 00
21. e.g. $2,050. 00 is debited to your account instead of $205. 00.

22. 11 Your Repayment Amount is Credited to someone else’s account.

23. 12 Payout Figure is too High :
2 i.. The Balance Outstanding is too High.
3 ii.. An incorrect Penalty Formula is applied.
24. iii.. The date of payout is included for calculation
i. This results in an extra day’s interest charged.

25. 13 The Repayment date is Different to the Drawdown Date:
26. This practice occurred in the late ‘80s and early ‘90s.
27. A Penalty Rate applied from commencement of the loan due to the difference between the ‘drawdown date’ and
28. the ‘anniversary repayment date’ i.e. interest for the period between the two dates was capitalised (added on to the
29. loan amount). This required a slightly higher loan repayment than had originally been requested.
30. The computer program detected an underpayment and then applied a penalty rate ... which was recorded in another
31. account. Interest was ‘capitalized’ (added on to the loan amount for the ‘balance of days’).
32. It resulted in ‘penalty interest’ being applied i.e. the financier charged say 14% instead of say 10%.
33. The customer usually was not notified until the end of the loan term.
34. This resulted in the ‘payout figure’ being much higher than it should have been.

14 Offset Accounts' (e.g. Savings) include ‘incorrect transactions’.
35. The ‘balance’ used in the savings/offset account is too low.
36. This results in a lesser amount of interest being credited to your account.

37. 15 Offset Accounts' ‘interest earned’ calculation is incorrect.
38. The ‘interest’ offset against the home loan interest is less than the correct amount

15 Removal of Funds from an Account
39. The financier transfers funds from the customer’s deposit account to the customer’s loan account without
40. the customer’s approval or mistakenly transfers funds from one customer’s account to another customer’s account.

16 Changing (ignoring) the Rules
41. The lender treats a ‘principal & interest’ loan as an ‘interest only’ loan without informing the customer.

17 Fine Print in Documentation
42. The ‘fine print’ in the documentation is not explained to the customer.

18 Documents are ‘Lost’
43. The customer’s files and / or documents are somehow ‘lost’ or there is no record.
44. It is important to keep your records and record telephone and other conversations with financiers.

19 Falsifying of Documents
45. There have been claims by clients of possible falsification of documents.
46. Keep your records. Record all conversations with financiers.

20 ‘Creation’ of Documents
47. There have been claims of ‘additions to the file’ of documents supposedly sent to the customer but that were ‘never seen’ by the customer.

21 Failure to ‘Discover’ Documents in Court Cases
48. Relevant documents are not produced by financiers in court cases.

49. 23 Penalty Interest Rate applied during Receivership
50. Financiers apply a ‘penalty rate’ of interest during the period of receivership ... the financiers benefit in many
51. cases as the period of receivership continues .. the financier is paid penalty interest plus expenses from the net
52. assets of the company.

53. 24 Charging Interest after every Transaction
54. Instead of charging interest to the customer’s account at the end of the month many of the financiers are now charging interest to the account whenever a deposit is made e.g. weekly or in some cases daily.
55. This negates most of the benefit of making weekly payments on your home loan or making ‘extra’ payments.
56. It increases the financiers’ effective interest rate on the loan !

Author Name
Kevin Nowland -

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