Loan Advice

Hi, I'm new to MSE and required some advice.

I took out a loan with for £9,500 in 2016 on a five year agreement (60 months) at 15.9% APR. (This would see me paying back a grand total of £13,500)

My monthly payment is £225 and I have made 19 payments so far which is £4275.
I have also made two additional payments equating to £650,making the total paid so far £4925.

I wish to clear this loan within the next 8-10 months, by making over payments each month. I calculated that making a total payment of approximately £775 (£225+£550) would see me finishing the agreement around September this year with an total paid of around £11,990.

Upon calculating other monthly totals (ranging from around £650-£900) I found there to be hardly any difference in the total paid by the end of the agreement. Between £650-£900 monthly payments, I found there to be a difference of approximately £100 at the end of the agreement.

So my question/s would be, are my calculations correct, and if so is it worth paying the higher or lower amounts. (Lower= £650, Higher=£900)

My other query was, on the website of the company as of today, my settlement figure is at approximately £6,770 as a one of payment.

If I add that to what I've already paid, that means total paid would be in the region of around £11,700. So there would be no real benefit to paying that lump sum to make a saving on interest.

Which leads onto my final question, I've read about companies adding interest to final payments, and in this case the company confirmed it would be 30 days worth of interest. So I'm assuming the best protocol when it's within my reach to clear the amount, would be to clear a large chunk only leaving a small amount to incur least amount of interest.

If anyone has any alternative advice on how I can clear this quicker, please feel free to share your ideas.

Apologies that the post has been long, I thought I'd clarify all details so anyone reading understands the entire situation.

Thank you in advance,

Regards

Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    First Anniversary Photogenic Name Dropper First Post
    The sooner you pay if off, the more you will save in interest.

    If you pay if off today, you'll save £2k in interest.

    However you choose to do it, interest is charged daily, so the more you pay and the earlier you pay, the better.
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