BANKS ARE CHEATING

I really need your advice ladies... here we go : today we decided to pay off our car loans...

the first bank we went to, told us that they have changed the interest rate 2 years ago (without informing us) from 3.99% flat to 4.3 % reducing.. The loans were for 6 years. In their understanding of reducing interest, all the instalments go towards the interests first. They are charging the whole interest for the 6 years first, so not much has contributed to the principle loan, although there are 3 more years.

The second bank didn't change the interest rate (thanks for that), but still saying that they have charged the interest first, so the principle remains...

I have found out that, according to the ruling of the Central Bank of UAE:
http://www.centralbank.ae/en/index.php?option=com_content&view=article&i...

[b]2. The interest rate applicable to Personal Loans would be determined by each bank and disclosed to customers on the board mentioned in para (4) below (use of Flat rate is prohibited). Banks then would use the said rate to arrive at the interest amount as follows:

a - Interest amount =

Principal Amount X Interest rate X (Period of loan +1 (In Months ))

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2 X 100 X 12

For the purpose of this formula, the interest rate would be a "fixed" one for the whole period of the loan. Any changes would be applicable to new loans only. Banks must also deduct a constant installment amount at the end of each month (or three months, six months, 12 months, depending on each bank's preference), starting from the next month following the month in which the loan was given. The amount of installment will be governed by the formula:

Installment amount = Principal + Interest amount / Total No. of instalments

b - "Interest amount" for Personal Loans could alternatively be determined at the end of each month on a reducing balance basis using the following simple formula:

Interest amount = Balance of the loan at the beginning of the month x interest rate

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12 X 100

Banks then would take the "interest amount" deduct it from the agreed monthly installment amount and use the net amount to reduce the balance of the loan to make the new "balance of the loan at beginning of the month" to be used again for calculations at end of the next month.

For the purpose of this formula both interest rate and installment amount would be fixed for the whole period of the loan, otherwise, these would have to be agreed in a clearly drafted loan agreement.

If a borrower decides to prepay his personal loan, the bank must charge the applicable penalty on the balance outstanding, as a percentage (in the form of interest rate), and in case of (a), above, refund the interest for the remaining period of the loan, using the first formula.[b][/b][i][/i]

[b]SO according to this ruling, the bank can not do this... but the question is, how to proceed now..

Could you please give your advice??[/b]