Sainsburys Loan - Early settlement figure
Hi all. Im a new user to the forum so go easy.
Been reading for a while and can see that there are some very knowledgeable people on here.
I recently took a loan from Sainsburys to consolidate a few cards and make my life simpler. It was allways going to be short term as it was the end of a house build project. I have now had a vat rebate and wish to clear this loan, however, when I applied for the settlement figure i was surprised at how high it was.
I am admittedly no expert, thus why I am here to hopefully take advantage, with thanks, some of your expertise.
Here's the bottom line with the loan situation. All figures to date.
Loan amount 12000.
Interest rate 9.2% APR
I have made 7 payments of £251.80 (total £1762.60)
there was 2 months deferred payment at the start of the loan term.
the total amount repayable was £15108.
The settlement figure that Sainsburys have come up with is £11261
Now, firstly, i thought that it was now against the law to front load interest on personal loans. Is that the case? because this looks to me, as a laymen, that the interest was calculated, then added to the figure at the start. I expect im wrong here, or they wouldn't do this, would they? However id be keen to see what the law is here if anyone has a link.
secondly. The payments i have made total £1762.60 yet the payments to the capital sum of the loan have totalled a meagre £739. That's 1023.60 of the money i have paid gone to interest only in 9 months interest payments! so £113.73 interest a month and 105.57 to the capital. this doesn't add up to me.
Hopefully someone can explain this to me, because currently i feel that sainsbury's bank are trying it on.
Any help with this would be very much appreciated.
I'd also like to note that the actual loan documentation i received from sainsbury's was very scant on detail. there was no breakdown at all of capital payments. We have had to press them to receive a breakdown which they say will be here in a few days.
I look forward to reading your replies.
Been reading for a while and can see that there are some very knowledgeable people on here.
I recently took a loan from Sainsburys to consolidate a few cards and make my life simpler. It was allways going to be short term as it was the end of a house build project. I have now had a vat rebate and wish to clear this loan, however, when I applied for the settlement figure i was surprised at how high it was.
I am admittedly no expert, thus why I am here to hopefully take advantage, with thanks, some of your expertise.
Here's the bottom line with the loan situation. All figures to date.
Loan amount 12000.
Interest rate 9.2% APR
I have made 7 payments of £251.80 (total £1762.60)
there was 2 months deferred payment at the start of the loan term.
the total amount repayable was £15108.
The settlement figure that Sainsburys have come up with is £11261
Now, firstly, i thought that it was now against the law to front load interest on personal loans. Is that the case? because this looks to me, as a laymen, that the interest was calculated, then added to the figure at the start. I expect im wrong here, or they wouldn't do this, would they? However id be keen to see what the law is here if anyone has a link.
secondly. The payments i have made total £1762.60 yet the payments to the capital sum of the loan have totalled a meagre £739. That's 1023.60 of the money i have paid gone to interest only in 9 months interest payments! so £113.73 interest a month and 105.57 to the capital. this doesn't add up to me.
Hopefully someone can explain this to me, because currently i feel that sainsbury's bank are trying it on.
Any help with this would be very much appreciated.
I'd also like to note that the actual loan documentation i received from sainsbury's was very scant on detail. there was no breakdown at all of capital payments. We have had to press them to receive a breakdown which they say will be here in a few days.
I look forward to reading your replies.
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Comments
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Did you take the loan over 5 years? If so, the figures look spot on to me.
The way the interest is being applied is standard practice and perfectly legal. You pay more interest in the early years because you owe more. 9.2% of £12,000 is more than say, 9.2% of £6,000 which may be the balance left after 3 years.
It sounds like you thought the interest was calculated up front and then applied evenly across all 60 payments and this won't be the case.
It has cost you a little more in interest because you deferred the first two payments and so didn't reduce your balance in those months. But not much.Sealed pot challenge member #325
£591.02 / £1500
£2 saver club member #83
Target £246 / £5000 -
Looks spot on to me. You borrowed £12,000 at 9.2% APR. As you deferred for two months, effectively you borrowed £12,184.71.
Your third month's payment will have been one month's interest on £12,184.71, which is £93.42, and capital payment of £158.38, leaving a balance of £12,026.32.
Your fourth month's payment will have been one month's interest on this balance, which is £92.20, and capital payment of £159.60, leaving a balance of £11,866.72.
Your fifth month's payment will have been one month's interest on this balance, which is £90.97, and capital payment of £160.82, leaving a balance of £11,705.90.
Your sixth month's payment will have been one month's interest on this balance, which is £89.75, and capital payment of £162.05, leaving a balance of £11,543.85.
Your seventh month's payment will have been one month's interest on this balance, which is £88.50, and capital payment of £163.30, leaving a balance of £11,380.55.
Your eighth month's payment will have been one month's interest on this balance, which is £87.25, and capital payment of £164.55, leaving a balance of £11,216.
Your ninth month's payment will have been one month's interest on this balance, which is £85.99, and capital payment of £165.81, leaving a balance of £11,050.19.
Given that they're then allowed to add on 2 months' interest for early settlement, which would be £11,220. Given that I've used a simplified formula assuming that each month is equal in length, the figure you've been given looks correct to me."Facism arrives as your friend. It will restore your honour, make you feel proud, protect your house, give you a job, clean up the neighbourhood, remind you of how great you once were, clear out the venal and the corrupt, remove anything you feel is unlike you... [it] doesn't walk in saying, "our programme means militias, mass imprisonments, transportations, war and persecution."0 -
Thank you both.
Yes, i did figure it on even spread and there in was where my confusion occurred as it seems a lot of interest when compared to capital repayment. Seeing it laid out like this has clarified any misunderstanding. For that i thank you.
Regards P0 -
If you pay all but 1 pound of the loan, you shouldn't have to pay the 2 months interest penalty, it's not much, but saves you something, at least...0
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