High error rates in loan statements
Past surveys have shown a high rate of calculation errors in home loan statements by lenders. There is no such thing as a perfect system, mistakes are a fact of life and that's why you should keep a close eye on your home loan or business loan statements. And not surprisingly, most errors favour the lender. The three main areas where errors are likely to occur are:
- when interest rates change
- when refinancing or paying out a loan
- where loan accounts are linked to a savings account
There are a number of mistakes that commonly occur:
- Incorrect calculation of the repayment amount
- Incorrect interest rate applied to the loan.
- Incorrect calculation of the interest amount
- Too high a payout figure calculated (ie. too high an outstanding balance used or incorrect penalty formula applied).
- Extra repayments not credited to your account on the day you make them.
These errors are certainly worth tracking down as a small mistake at the beginning of a 25-year loan can balloon to something far more substantial as it compounds. When errors are discovered and accurately verified, lenders are usually only too happy to refund the owing money. Software packages are now available that can run checks on your statements for you. However, make sure you do your homework on these too.
Published: 29 August 2005