Wells fargo places a floor on the prime rate. The floor is 7.7. What that means is that if your apr is prime + 2.9, then your apr will never be lower than 10.6 (7.7+2.9). Even though the real prime is much lower than 7.7%
USUALLY~~~PRIME + 2.90% = X WITH A "FLOOR" means... PRIME= 4.75% (PRIME IS WHAT IT IS...PRIME CAN'T BE CHANGED BY THE BANK...THE FEDERAL RESERVE SETS IT) + 2.90% Should be 7.65%...BUT THE FLOOR IS 7.70%...so it will NEVER go below 7.70% ...THEN YOUR FLOOR WOULD BE 10.60% (MINIMUM INTEREST RATE)
No George, their floor is on THEIR prime rate, not the overall rate, and not the published prime rate. It is on the prime rate that they use. I just got my rate decrease from prime +5.9 to prime + 2.9. So my rate went from 13.6 (7.7+5.9) to 10.6 (7.7+2.9) I do have a clue what I am talking about. The floor is on their prime rate.
I have seen a MINIMUM INTEREST RATE WITH PRIME+ some % WITH FLOOR LIMIT (MINIMUM INTEREST RATE)...but NEVER a FLOOR on a PRIME RATE...SORRY...
Well, I have never seen a floor on prime rate before either. That is why I posted this because it is not normal. But that is how Wells Fargo does it, and I thought people should know.
i have a Wells MC, and they dropped my rate a few months ago. i was going to wait until i got home to see what my letter said, but i agree, it is some screwy formula, they said prime + something, but the math didn't equal out. I had to figure out for myself they weren't using what everyone else considers prime rate. ok, just called them - I have prime + 4.9 (12.6). As she stated "our floor on prime is 7.7" (how's that for confusing)
