Ask a Law Question, Get an Answer ASAP!
my name is ***** ***** I will help you with this.
Could you please explain your situation a little more?
The customer is seeking to enter an Installment Purchase Agreement to keep the loan off the balance sheet as a debt and does not want references to loan /loan agreement, interest rate, financing in the agreement. In other words, the agreement will be a loan in all but name and the customer accepts this ?
Ok, are they a business customer?
Yes. Not an average consumer.
So you are charging a fee, but it is not interest.
What about an admin fee
Or a facility fee
Then its not interest.
Does that help?
Yes thanks but we are only softening the terms. The agreement is to have the full effect of a loan agreement and if we change terms such as interest rate to 'payment installment rate' or 'payment installment charge' does that mean that it does not equate to interest rate at all and would not be interpreted as that ?
Yes I dont think you can have interest but the repayment includes admin fee etc
OK. Thanks assistance.
Can I clarify anything else ?
Just a final question then from me - In no way could the alternatives set out above i.e installment payment rate be interpreted as being the same as an interest rate in the agreement ?
Possible, but if you say its an admin fee it should be ok.
Never say never
Yes but we want it to be interpreted as an interest rate not an admin fee ? It is not the intention to be an admin fee.
Yes I know but dont want to charge interest, hence this name instead
We want to charge interest but under a different term in the agreement. The agreement must be a loan in all but name. This is only facilitating a customer particular purpose of the customer but from our perspective everything remains the same and must take effect as such. Is that unclear the way I am explaining it ?
Yes. That is why you call it an admin fee
So its not called a loan
Yes. So the admin fee depending on how it is structured in the agreement will operate as an interest rate. Is that what your interpretation following my explanation of the situation ?
Yes, it is renamed as an admin fee, so is not an interest fee. I am not an accountant but showing like that should hopefully give you what you need
Ok. Thanks very much. Your replies and explanations were very helpful to me.