# AIB Personal Loan



## FKhan (16 Apr 2008)

Last June I decided to borrow €6,000 from AIB as personal loan after using their online calculator for repayments:

[broken link removed]

I was told it would be €277.14 monthly repayments so 
€277.14 x 24 = €6,651.36 

€6,651.36 - €6,000 = €651.36
I thought €651.36 is resonable cost of €6,000 borrowed for 2 years & so I decided to go ahead. 

What I did not know at this time is they also charge quarterly interst of 2.7% on balance outstanding at that quarter & I have to pay €530 extra in the name of this quarterly interest

So the total cost of credit is almost double then I thought
Also the interset date is before the collection date on that quarter so it will be charged on bigger amount


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## Guest120 (16 Apr 2008)

Whats your question?


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## FKhan (16 Apr 2008)

Bluetonic said:


> Whats your question?


 
There is no question

Just to inform all you guys to keep in mind the catch of this quarterly interest when you go for personal loan


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## irishpancake (16 Apr 2008)

FKhan said:


> There is no question
> 
> Just to inform all you guys to keep in mind the catch of this quarterly interest when you go for personal loan



Hi FKhan

Can you provide a link to AIB where this "Quarterly Interest"  is mentioned?

I believe this is either a misunderstanding on your part or mis-information from AIB, as the rate you pay for a personal loan with AIB can vary from 7.76% APR to 12.04% APR depending on:

the amount borrowed, 
the term of the loan, 
your personal credit rating/ability to repay
and other factors.

see here for [broken link removed]

I believe the loan quoted above is in the 10.11%(10.50% APR) band.

APR rates should include all additional associated costs to reflect the real cost of borrowing. All lenders have to quote the APR when offering a loan.

see here for an explanation of [broken link removed]

Just for your info, there is a thread providing reasonably up-to-date info on the best value personal loans in the "Best Buys" section, see here


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## FKhan (16 Apr 2008)

Hi Irish

There is no misunderstanding on my part as I have been through the agreement. 

I phoned AIB for quarterly interest charged & they said its normal & I should be aware of this, they apologised if I was'nt told at the time of borrowing. They also said cost of borrowing does'nt include this interest. 

I'll be grateful if you can provide me with further details that this interest is wrongfully charged so that I can get back to them for refund.

I gave you the link for AIB Repayments calculator in my original post, workout yourself for €6,000 borrowed for 24 months, you'll see €277.14 without payment protection

I could have provided you my Excel sheet workout for repayments but I dont know how to attache files in this post as I cant see any tool for that


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## aidan119 (16 Apr 2008)

I have to say this is very strange. I tried the link and it does tell it as you say. I can't see what the purpose of the calculator would be if it did not include all interest.

Ask AIB what the €277.14 per month on the calculator represents.

To me it is about right for a loan with about 10.5% APR which is what they publish. I would not pay the €530 without further enquiry.
You may need to go up a level from the person you are talking to.


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## Blinder (16 Apr 2008)

I think that the person that you were talking to has possibly made a mistake and given you the wrong information
The €530 would have being included in the original monthly payments and should not be an extra charge.

The only reason that the total cost of credit would change is if you were on a variable rate and the interest rate has changed.


For example this [broken link removed], gives the month repayment as €1000 over 36 months as €33.19, which is the same amount as give for the repayment if you put in these values in the initial calculator you linked to.
33.19 * 36 = 1194.84 - 1000 = 194.84 ( which is also the total cost of credit shown on that page.)

That page says "_If we approve you for a loan, the actual rate applicable and the total cost of credit will be shown on the first page of the Credit Agreement which will be sent to you for signing if you wish to proceed._"
What does it say on your credit agreement?


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## dewdrop (16 Apr 2008)

As a retired bank offficial i never heard of this additional interest charge. Interest is charged and debited to the account each quarter. it will be interesting to learn the outcome of this post


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## FKhan (17 Apr 2008)

They setup a new account for this loan in my eBanking. A direct debit every month from my personal account of €277.14 is setup to be credited to this loan account. Below is the summary of this loan account, Figures upto Mar08 are real & I have interpolated the values after Mar 08. This quarterly interest (shown bold) is debited from this loan account every three months

Month Cre/Debit Balance
Sep-07 €277.14 " €5,520.78 " 
Oct-07 €277.14 " €5,243.64 " 
Nov-07 €277.14 " €4,966.50 " 
*Dec-07 -€135.39 " €5,101.89 " 2.7%* 
Dec-07 €277.14 " €4,824.75 " 
Jan-08 €277.14 " €4,547.61 " 
Feb-08 €277.14 " €4,270.47 " 
*Mar-08 -€117.92 " €4,388.39 " 2.7%* 
Mar-08 €277.14 " €4,111.25 " 
Apr-08 €277.14 " €3,834.11 " 
May-08 €277.14 " €3,556.97 " 
*Jun-08 -€96.04 " €3,653.01 " 2.7%* 
Jun-08 €277.14 " €3,375.87 " 
Jul-08 €277.14 " €3,098.73 " 
Aug-08 €277.14 " €2,821.59 " 
*Sep-08 -€76.18 " €2,897.77 " 2.7%* 
Sep-08 €277.14 " €2,620.63 " 
Oct-08 €277.14 " €2,343.49 " 
Nov-08 €277.14 " €2,066.35 " 
*Dec-08 -€55.79 " €2,122.14 " 2.7%* 
Dec-08 €277.14 " €1,845.00 " 
Jan-09 €277.14 " €1,567.86 " 
Feb-09 €277.14 " €1,290.72 " 
*Mar-09 -€34.85 " €1,325.57 " 2.7%* 
Mar-09 €277.14 " €1,048.43 " 
Apr-09 €277.14 €771.29 
May-09 €277.14 €494.15 
*Jun-09 -€13.34 €507.49 2.7%* 
Jun-09 €277.14 €230.35 
Jul-09 €230.35 €0.00

Dewdrop, Can you understand whats this?


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## Berlin (17 Apr 2008)

When you add all your quarterly interest charges together they should amount to €651.36, not €530. That's how your interest is paid, gradually - not in one big lump.


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## FKhan (17 Apr 2008)

Berlin said:


> When you add all your quarterly interest charges together they should amount to €651.36, not €530. That's how your interest is paid, gradually - not in one big lump.


 
The cost of credit €651.36 is included in €277.14 x 24 monthly instalments

When u add up bold figures they equals €529.51

Can anyone tell me what they actually are & why they have been deducted, I have been told by AIB that its a quarterly interest on the money I hold at that quarter. Does €277.14 monthly not include all costs?


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## Blinder (17 Apr 2008)

FKhan said:


> Does €277.14 monthly not include all costs?


 
It does. The cost of credit would be these interest rates plus they documentation charge of the loan ( I think about €75)
You do not need to paid an extra €530 interest.


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## aidan119 (17 Apr 2008)

I think they are charging you the interest twice in error.


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## dewdrop (17 Apr 2008)

i dont know if this story is relevant. many years ago a client came to me and said nicely that the bank was charging him interest twice. he said that when he took out the loan i told him that a monthly payment of  say x would clear it off over the term provided interest rates rremained the same. he then pointed out that such payments were made but bank also charged him interest every half year which was the norm then. I failed to get him understand that the monthly payments were lodgments to the account reducing the balance owed and the bank had to charge out the interest as a debit item. believe it or not a junior known to client was passing by and in a few seconds succeeded in getting him to understand that he was not being fleeced. apologise if this incident is of now help. dont understand the reference to 2.7%


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## calculator (17 Apr 2008)

They're not charging you twice, this is just how the interest is added.   The "Balance" would have started out at €6000, not €6651.36 (I'm guessing there are some payments missing at the start (2?), as you said you borrowed €6000).

It might be clearer if they showed each month which portion of the €277.14 was interest and which portion was repayment of the principal and just show the Balance field diminishing by the principal repayment.   When you add up all the interest debits over the 2 years, it should come to the €651.36 - I think you're missing a couple of payments at the start and an interest debit and the last payment will be €277.14.

ATB,
A



FKhan said:


> They setup a new account for this loan in my eBanking. A direct debit every month from my personal account of €277.14 is setup to be credited to this loan account. Below is the summary of this loan account, Figures upto Mar08 are real & I have interpolated the values after Mar 08. This quarterly interest (shown bold) is debited from this loan account every three months
> 
> Month Cre/Debit Balance
> Sep-07 €277.14 " €5,520.78 "
> ...


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## aidan119 (17 Apr 2008)

Is the 2.7% interest amount just a notional reference on the statement every 3 mths or is it actaully paid as a DD on top of the monthly 277.14 ? ie did it actually come out of your other a/c as a payment?

If its not paid then it seems to be a presentation issue. If it is paid on top of the 277.14 then something is amiss.


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## FKhan (18 Apr 2008)

calculator said:


> They're not charging you twice, this is just how the interest is added. The "Balance" would have started out at €6000, not €6651.36 (I'm guessing there are some payments missing at the start (2?), as you said you borrowed €6000)
> 
> It might be clearer if they showed each month which portion of the €277.14 was interest and which portion was repayment of the principal and just show the Balance field diminishing by the principal repayment. When you add up all the interest debits over the 2 years, it should come to the €651.36 - I think you're missing a couple of payments at the start and an interest debit and the last payment will be €277.14
> ATB,
> A


 
Yes calculator, you are right, instead of starting from 6,561.36 they started from 6,000. First few payments are not missing the difference between 6,000 & first installment they charged in the first month.


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## dewdrop (18 Apr 2008)

Dear FKhan...I hope you are happy with all the explanations apart from the reference to 2.7% which i dont understand. another way of looking at is to bear in mind you borrowed 6K and made 24 reductions of 277.14. this resulted in clearing the loan with it being debited/increased each quarter by an interest charge calculated on the reducing balance of the loan. Hope this makes sense as i am getting  a bit rusty!


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