How much will i save paying off loan? Help needed.

gord115 · 13 January 2018 at 3:14PM

I have a TSB loan at 2.9% apr for £11000 and have made 7 payments of £318.97
I have 29 payments to make(£318.97 x 29=£9250.13)

I have a settlement figure of £8979.43 thus saving me £270.70

I now have the money to pay this off.

The money is in my Santander 123 account earning 1.5% interest.

I know it will save my money paying it off(especially as I will leave the £318.97 I have gained every month untouched) but by how much?

Help much appreciated.

Tom99 · 13 January 2018 at 4:23PM

[FONT=Verdana, sans-serif]2.9% less 1.5% = 1.4% diff

[/FONT] [FONT=Verdana, sans-serif]You are paying off £8,979 2.42 years early.

[/FONT] [FONT=Verdana, sans-serif]If you assume the balance over those 2.42 years would be half the current balance then the amount you are saving is:

[/FONT] [FONT=Verdana, sans-serif](£8,979/2)*1.4%*2.42yrs = £152

[/FONT] [FONT=Verdana, sans-serif]Alternatively you could say the saving of £270.70 represents interest at 2.9% which you are replacing with funds costing you 1.5% so:

[/FONT] [FONT=Verdana, sans-serif]£270.70/2.9*1.4= £131[/FONT]

gord115 · 14 January 2018 at 2:30PM

Thanks Tom, that's around the figure I came up with but wasn't sure.

Much appreciated.

How much will i save paying off loan? Help needed.

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