Starfin has published guidance on how to check a loan agreement online: add up all scheduled payments over the entire term and compare that total with the “total cost of the loan”. After that, check each date separately — how much must be paid and what portion of the debt each payment covers.
What the total cost means and how to calculate it
The loan amount is the borrowed funds; total charges include interest, fees and other costs; the total cost of the loan is the loan amount together with these charges. It is the total cost that should be reconciled with the sum of all payments in the schedule.
Appendix No. 1 to the agreement lists the dates and composition of the instalments. To separate principal, interest and fees, Starfin recommends using the explanation in the article payment schedule and the total cost of the loan.
How to check the payment schedule by rows and columns
First check row by row: each payment on a given date should consist of the amount repaying the principal, the interest and the specified fees. Then total down each column: all of the borrower’s payments over the full term should add up to the total cost of the loan.
Do not add the loan disbursement row as an extra payment, and check whether there are costs included in the total cost but shown separately from the regular instalments. Each amount should be counted only once to avoid double counting.
What mistakes to look for in individual payments
Do not multiply the first payment by the number of payments: it may include a one-off fee or a discount, and the principal may be repaid in the final payment period. Under Starfin’s scheme the loan origination fee is charged in the first period and the principal is repaid at the end of the term, so check the composition of each payment, not just its amount.
Comparing a schedule that includes a discount with a total cost that does not is incorrect — you must first bring both calculations to the same terms. If you plan to repay early, a separate calculation is needed for the chosen date and other conditions are set out in the Starfin procedure for early repayment of a Starfin loan.
When the totals don’t match
Check the loan amount, the term, the dates, the payment frequency and whether a discount has been applied; do not substitute general examples for your personal terms. If a discrepancy remains, ask the lender to explain it in hryvnias and to identify the component that creates the difference.
Starfin suggests using a standard request: “The sum of the payments in the schedule is ___, and the total cost in the agreement is ___. Which component creates the difference and where is it stated?”. — Starfin
Before signing, you should be able to see not only the total but also all dates and the components of each payment that make up that total.
