Repayment amount incorrectly calculated

A client applied for a $120,000 personal loan from her local branch in order to purchase a boat costing $140,000. The client was approved for the loan consisting of monthly payments of $615 (principal + interest) for 15 years with a $15,000 down payment. Nine months later, the client received a statement from the bank saying she owed more each month than what was initially agreed.

After reviewing the contract, the client noticed that monthly payments of $615 for 15 years totaled $110,000, not even enough to cover the principal amount owing; the bank had made an error in calculating the monthly payments. The client immediately got in contact with her local branch to clarify the mistake. The bank's regional manager made multiple proposals to rework the terms of the loan, but all were rejected by the client. The bank then sent a final letter to the client, stating she should not benefit from an unintentional error and demanding repayment in full within 10 days.

The client tentatively accepted one of the original offers in order to get her situation out of the collections process. The client asked the bank to confirm the new terms of the loan, at which point the bank informed the client it had made yet another error; the new payment would be $1,150 per month, over $100 higher than what the client had agreed to. The client appealed to OBSI.

Our investigation concluded that the parties were not too far apart and that it was in both parties' interest to settle. The client would be able to retain the boat and the bank would save legal costs and avoid potential losses arising from seizing the boat and re-selling it. After thorough negotiations between the parties, OBSI facilitated a settlement between the bank and the client in which the client would pay off the outstanding balance in full according to new terms that were acceptable to both parties.

(2009)