mrsb
Posts: 196
Likes: 102
|
Post by mrsb on Apr 2, 2020 8:16:41 GMT
They've just lost 20% of their wages bill, added £2M to their income, Lost £?? from new lending. Does forbearance stop the income from existing loans and new tranches?
I think its not so much what they've done, but how it's been done. The notion of what's good for one is good for all - is not an easy idea to sell when only one party is in control, and it stays largely silent, and then baits its audience with things like rounding the AA balances.
Getting our money back will satisfy all complainers. If AC end-up enriched by this disaster, not many will mind, but it will be nevertheless a despicable outcome.
|
|
alender
Member of DD Central
Posts: 981 
Likes: 683
|
Post by alender on Apr 2, 2020 8:30:43 GMT
I am a tad overwhelmed trying to read and assimilate so much information. I want it explained in simple terms. As far as I can ascertain (help me if I am wrong) the lenders fee would mean that we lenders incur a trim to our interest of 0.075% of stated loan value per monthly interest payment. So, trying to simplify, if I was previously earning, say, 0.4% per month, I would now get 0.4%-0.075% instead, i.e. 0.325% per month. *IF* that is all there is to it, then it doesn't seem too bad to me considering the rather extreme current circumstances. As 0.75% is taken each month it is more that 0.9% per year because of the effect of compound interest i.e. if you take 0.075% of of you first months interest that money is not there the next month to earn interest. Also the fees are not tax deductible this also increases the cost for taxpayers. From my calculation Using QAA rate of 4.1% the fee Reduces net interest by 0.93% for non taxpayers, at 20% tax rate it is reduced by 1.17%, at 40% reduced by 1.56% Using 90d rate of 5.75% the fee Reduces net interest by 0.95% for non taxpayers, at 20% tax rate it is reduced by 1.18%, at 40% reduced by 1.58%
|
|
iRobot
Member of DD Central
Posts: 1,680
Likes: 2,477
|
Post by iRobot on Apr 2, 2020 9:35:00 GMT
It's easy to see why they have introduced this fee. They know the business is dead but can't just fill their pockets with funds that belong to investors without the fear of prison. It's a way of laundering the money to fill their boots with. Contemptible first post!1111  And for some reason completely edited! 
|
|
|
|
Post by Ace on Apr 2, 2020 9:50:35 GMT
I am a tad overwhelmed trying to read and assimilate so much information. I want it explained in simple terms. As far as I can ascertain (help me if I am wrong) the lenders fee would mean that we lenders incur a trim to our interest of 0.075% of stated loan value per monthly interest payment. So, trying to simplify, if I was previously earning, say, 0.4% per month, I would now get 0.4%-0.075% instead, i.e. 0.325% per month. *IF* that is all there is to it, then it doesn't seem too bad to me considering the rather extreme current circumstances. As 0.75% is taken each month it is more that 0.9% per year because of the effect of compound interest i.e. if you take 0.075% of of you first months interest that money is not there the next month to earn interest. Also the fees are not tax deductible this also increases the cost for taxpayers. From my calculation Using QAA rate of 4.1% the fee Reduces net interest by 0.93% for non taxpayers, at 20% tax rate it is reduced by 1.17%, at 40% reduced by 1.56% Using 90d rate of 5.75% the fee Reduces net interest by 0.95% for non taxpayers, at 20% tax rate it is reduced by 1.18%, at 40% reduced by 1.58% I'm not really sure how you are arriving at these figures. If we take the first one; that 0.075% per month compounded for 12 months is 0.93%annually. I make it 0.9037%. Perhaps you just missed a digit. My working is: ( 1.00075 ^ 12 ) - 1 ) * 100 = 0.9037 So, rounding to two decimal places, the monthly fee compounds to 0.90% per year for non taxpayers.
|
|
Mikeme
Member of DD Central
Posts: 428
Likes: 331
|
Post by Mikeme on Apr 2, 2020 9:57:46 GMT
Why compound it. The payment is simply divided by 12 as it is used monthly. Saying .9% PA is the sum of the parts paid. I'm glad I'm simple.
|
|
mrsb
Posts: 196
Likes: 102
|
Post by mrsb on Apr 2, 2020 10:22:08 GMT
Is there a tax implication for AC as to how the fee is applied? If there is, then surely that will drive how it's done!
|
|
alender
Member of DD Central
Posts: 981
Likes: 683
|
Post by alender on Apr 2, 2020 10:23:39 GMT
As 0.75% is taken each month it is more that 0.9% per year because of the effect of compound interest i.e. if you take 0.075% of of you first months interest that money is not there the next month to earn interest. Also the fees are not tax deductible this also increases the cost for taxpayers. From my calculation Using QAA rate of 4.1% the fee Reduces net interest by 0.93% for non taxpayers, at 20% tax rate it is reduced by 1.17%, at 40% reduced by 1.56% Using 90d rate of 5.75% the fee Reduces net interest by 0.95% for non taxpayers, at 20% tax rate it is reduced by 1.18%, at 40% reduced by 1.58% I'm not really sure how you are arriving at these figures. If we take the first one; that 0.075% per month compounded for 12 months is 0.93%annually. I make it 0.9037%. Perhaps you just missed a digit. My working is: ( 1.00075 ^ 12 ) - 1 ) * 100 = 0.9037 So, rounding to two decimal places, the monthly fee compounds to 0.90% per year for non taxpayers. Used Excel compand interest rate calculations (func ACCRINT or IPMT) and get these results, month are calander months 1 - Jan, 2 - Feb ....
Interest rate 4.1%
Month Total Interest
0 £100.00
1 £100.34 0.33525
2 £100.67 0.336374
3 £101.01 0.337502
4 £101.35 0.338633
5 £101.69 0.339768
6 £102.03 0.340907
7 £102.37 0.34205
8 £102.71 0.343197
9 £103.06 0.344348
10 £103.40 0.345502
11 £103.75 0.34666
12 £104.10 0.347823
Interest rate 4.1%, monthly fee 0.075%
Month Total Fee Interest
0 £100.00
1 £100.26 0.07525144 0.33525
2 £100.52 0.07544709 0.336122
3 £100.78 0.07564325 0.336996
4 £101.04 0.07583992 0.337872
5 £101.31 0.07603711 0.33875
6 £101.57 0.07623480 0.339631
7 £101.83 0.07643301 0.340514
8 £102.10 0.07663174 0.341399
9 £102.36 0.07683098 0.342287
10 £102.63 0.07703074 0.343177
11 £102.90 0.07723101 0.344069
12 £103.16 0.07743181 0.344964
Difference £104.10 - £103.16 = 0.94 but extract figure is £0.9330271355 displays as 0.93 as this is rounded as amounts only displayed to 2dp.
Plug in rate of 5.75% to get results in same table to get 0.95 rounded
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 2, 2020 10:25:25 GMT
These fees will cost me £90 pm. But I am not complaining. I would rather have people there working to preserve my capital.
|
|
mrsb
Posts: 196
Likes: 102
|
Post by mrsb on Apr 2, 2020 10:26:16 GMT
Why compound it. The payment is simply divided by 12 as it is used monthly. Saying .9% PA is the sum of the parts paid. I'm glad I'm simple. All depends if you would have otherwise re-invested the money that's been taken for the fee. Even then it's not so simple as the money lost by not getting interest on the fee money would be at the rate of wherever you would have invested [the fee!] ..... I think ...? Crossed with alender - who makes the point with much more elegance.
|
|
alender
Member of DD Central
Posts: 981
Likes: 683
|
Post by alender on Apr 2, 2020 10:28:30 GMT
Why compound it. The payment is simply divided by 12 as it is used monthly. Saying .9% PA is the sum of the parts paid. I'm glad I'm simple. Because that's the way it works. If only it was that simple my job for the last 40 years would have been so easy, coved this in my first A level maths lesson.
I think you should take a course on basic maths/finance.
But please if anyone can fault my calculations I would be interested as knocked these out quickly. Could not think a better/easier way to do this as excel does not have a compound interest rate function with freq of 1 month ACCRINT Freq - Coupon payments per year (annual = 1, semiannual = 2; quarterly = 4), no monthly.
|
|
|
|
Post by chris on Apr 2, 2020 10:44:46 GMT
Don't forget the quoted lender rates and target interest rates on accounts also need to be compounded. On that basis the rates displayed are currently understating the return given.
|
|
alanh
Posts: 556
Likes: 560
|
Post by alanh on Apr 2, 2020 10:49:43 GMT
Why compound it. The payment is simply divided by 12 as it is used monthly. Saying .9% PA is the sum of the parts paid. I'm glad I'm simple. Because that's the way it works. If only it was that simple my job for the last 40 years would have been so easy, coved this in my first A level maths lesson.
I think you should take a course on basic maths/finance. It should be compounded, obviously. The problem is given the situation on this platform I would think the precise treatment of this 0.9% is the absolute least of our worries.
|
|
Mikeme
Member of DD Central
Posts: 428
Likes: 331
|
Post by Mikeme on Apr 2, 2020 10:58:59 GMT
These fees will cost me £90 pm. But I am not complaining. I would rather have people there working to preserve my capital. Ours is BIGGER than yours. Because that's the way it works. If only it was that simple my job for the last 40 years would have been so easy, coved this in my first A level maths lesson. I think you should take a course on basic maths/finance. Left school at 14 so didn't even finish school. In the real world ran a very small manufacturing business for 35 years making things. Survived a number of downturns but nothing like this. Took staff on with no qualifications or experience and learned/trained along side them. 2 of them are still working in the business 32 years later. That is why I and many others have empathy with borrowers and lenders alike. It is why we are supporting AC because FEW of the borrowers deserve to be thrown to the wolves. At the same time many of the smaller lenders NEED the money not just want it to make more money. Here is a question for you. Who are the workers that we need the most in the whole world? We can't do without? Yet are the poorest everywhere.
|
|
mark
Posts: 163
Likes: 166
|
Post by mark on Apr 2, 2020 11:01:43 GMT
These fees will cost me £90 pm. But I am not complaining. I would rather have people there working to preserve my capital. Ours is BIGGER than yours. Because that's the way it works. If only it was that simple my job for the last 40 years would have been so easy, coved this in my first A level maths lesson. I think you should take a course on basic maths/finance. Left school at 14 so didn't even finish school. In the real world ran a very small manufacturing business for 35 years making things. Survived a number of downturns but nothing like this. Took staff on with no qualifications or experience and learned/trained along side them. 2 of them are still working in the business 32 years later. That is why I and many others have empathy with borrowers and lenders alike. It is why we are supporting AC because FEW of the borrowers deserve to be thrown to the wolves. At the same time many of the smaller lenders NEED the money not just want it to make more money. Here is a question for you. Who are the workers that we need the most in the whole world? We can't do without? Yet are the poorest everywhere. On form as always Sir
|
|
alibaba
Member of DD Central
Posts: 341
Likes: 245
|
Post by alibaba on Apr 2, 2020 11:12:49 GMT
These fees will cost me £90 pm. But I am not complaining. I would rather have people there working to preserve my capital. Ours is BIGGER than yours. Because that's the way it works. If only it was that simple my job for the last 40 years would have been so easy, coved this in my first A level maths lesson. I think you should take a course on basic maths/finance. Left school at 14 so didn't even finish school. In the real world ran a very small manufacturing business for 35 years making things. Survived a number of downturns but nothing like this. Took staff on with no qualifications or experience and learned/trained along side them. 2 of them are still working in the business 32 years later. That is why I and many others have empathy with borrowers and lenders alike. It is why we are supporting AC because FEW of the borrowers deserve to be thrown to the wolves. At the same time many of the smaller lenders NEED the money not just want it to make more money. Here is a question for you. Who are the workers that we need the most in the whole world? We can't do without? Yet are the poorest everywhere. Now I understand why I usually agree with your posts, very similar background, empathy with employers and workers. Keep up the good work.
|
|
