How Do I Calculate Loan Overpayments

abercrombie
abercrombie Posts: 78 Forumite
in Debt-free wannabe
Hey

I have a loan that is set up for monthly payments however I am paying it 4 weekly. How do I figure out how much quicker it will be paid off and also how much interest I will save if I increase my payments further?

Cheers :T
:)If you are not very careful, your possessions will possess you! :)

Comments

  • gfplux
    gfplux Posts: 4,985 Forumite
    Photogenic First Anniversary First Post Hung up my suit!
    I will try to help.
    So the loan is to be paid back with a payment once a calender Month. In a year you will make 12 payments
    If you pay the same amount every 4 weeks, in a year (52 weeks) you will make 13 payments.
    I suspect you will only get "ahead" with that last payment towards the end of year one.
    However you need to know if the interest is calculated on the daily outstanding balance or weekly or monthly.
    I hope this gives you some help
    There will be no Brexit dividend for Britain.
  • abercrombie
    abercrombie Posts: 78 Forumite
    gfplux wrote: »
    I will try to help.
    So the loan is to be paid back with a payment once a calender Month. In a year you will make 12 payments
    If you pay the same amount every 4 weeks, in a year (52 weeks) you will make 13 payments.
    I suspect you will only get "ahead" with that last payment towards the end of year one.
    However you need to know if the interest is calculated on the daily outstanding balance or weekly or monthly.
    I hope this gives you some help

    The interest is calculated on a daily basis, so if I pay back more I will save money which it what I want to calculate
    :)If you are not very careful, your possessions will possess you! :)
  • gfplux
    gfplux Posts: 4,985 Forumite
    Photogenic First Anniversary First Post Hung up my suit!
    That's good news.
    So without getting into a pulling teeth contest why don't you give a lot more information then others can make the calculation for you
    Or.........
    Why not call the loan company and ask the question
    There will be no Brexit dividend for Britain.
  • dancingfairy
    dancingfairy Posts: 9,069 Forumite
    I guess you would have to calculate the normal rate of interest charged and then recalculate it on your new payment schedule. You'd need to set up a spreadsheet to do this I guess? I don't think there is an easy way or a rule of thumb, although you could try the snowball calculator to do the caluclations for you?
    df
    Making my money go further with MSE :j
    How much can I save in 2012 challenge
    75/1200 :eek:
  • abercrombie
    abercrombie Posts: 78 Forumite
    gfplux wrote: »
    That's good news.
    So without getting into a pulling teeth contest why don't you give a lot more information then others can make the calculation for you
    Or.........
    Why not call the loan company and ask the question

    Outstanding balance as of today - £1728.24
    Paying £203.99 every 4 weeks (next payment 31 Jan 2014)
    Interest Rate - :mad: 49.9% (ridiculous I know)
    :)If you are not very careful, your possessions will possess you! :)
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    First Anniversary First Post Debt-free and Proud!
    Personally, I'd just hit it with every penny I could spare.

    50% APR is buying money. :eek:
  • gfplux
    gfplux Posts: 4,985 Forumite
    Photogenic First Anniversary First Post Hung up my suit!
    edited 5 January 2014 at 12:36PM
    I think you also need to know when they apply the payment to reduce the balance.
    I think, I think but not sure the following.
    If you can get your extra payment to effect the balance BEFORE they calculate the interest you will have the greatest effect.
    Ie if interest is applied daily (as you say) then the next payment 31st January made just a day earlier will have an effect.
    And.... If the payment is from money you already have you could make PART of the payment NOW?
    Further, how do you pay. Is it getting the money to them in the quickest way.
    Hope this helps, but still all guesswork without all the facts.
    Finally, do you know if they allow over payments, sorry that should have been the very, very, very first question. Because frankly at that interest rate they would be mad to allow you to pay it off ahead of time. It is a wonderful cash cow.
    There will be no Brexit dividend for Britain.
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