Amendment to True Costs Calculation Suggestion

Roland Askew from Money Flow has suggested that it may be useful to include the balance outstanding in the True Costs calculation.

Currently the True Costs include the month repayments but with a repayment loan some of the payment are being allocated to reducing the loan. As not all lenders allocate the payments in the same way it means the balance outstanding can vary between lenders. If you only look at the True Costs these may be higher for those lenders with higher monthly repayments but can be offset by lower capital outstanding.

It would therefore be good if the True Costs could include a tick box to include the difference between the original loan and the current balance outstanding. Which could then be deducted from the other cost to reflect the actual cost to the client i.e. interest and fees.

This would also deal with the situation where the fees are added to the loan that are currently excluded from the True Cost calculation. The added fees would increase the balance outstanding and therefore now be included in the True Costs.

I would be interest to hear what anyone else thinks.