loan redemption
In january i decided to consolidate my loans and credit cards with the view that i would pay it in full as soon as my investment property with the ex wife sells. The rte was worse than some of the debt i was consolidating at 15.9%. I got £16,000 over 96 months and was paying £286 per month.
Last week i decided to look at getting a cheaper loan to get a better rate on this loan as the property is yet to sell, i worked out that i had paid 7 payments of £286 and therefore had made approximately £2000 in repaymets to HSBC for this loan. Upon asking how much i would owe if i wanted to settle the loan i was astonished to learn that i still owed £15888 which means that my £2000 in repayments had paid about £112 back off my loan. I still cannot get my head around this to spite the bank trying to explain how they front load the interest... This cannot be right, can someone explain this? At less than £20 a month i would never pay this loan off surely?! Am i going mad?
I know i have signed for the T's and C's but if they had have said i would only chip away at the loan by that little then i would have never taken it!
Last week i decided to look at getting a cheaper loan to get a better rate on this loan as the property is yet to sell, i worked out that i had paid 7 payments of £286 and therefore had made approximately £2000 in repaymets to HSBC for this loan. Upon asking how much i would owe if i wanted to settle the loan i was astonished to learn that i still owed £15888 which means that my £2000 in repayments had paid about £112 back off my loan. I still cannot get my head around this to spite the bank trying to explain how they front load the interest... This cannot be right, can someone explain this? At less than £20 a month i would never pay this loan off surely?! Am i going mad?
I know i have signed for the T's and C's but if they had have said i would only chip away at the loan by that little then i would have never taken it!
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Comments
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Did you ask for a settlement figure or the outstanding balance?0
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i asked for the settlement figure. the full loan total if i was to pay it till the end would have been about £27k.0
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i asked for the settlement figure. the full loan total if i was to pay it till the end would have been about £27k.
So that would be correct then. You are charged interest monthly and the monthly interest on 16k at that rate would be what you have quoted
Any fixed term loan the earlier amounts are mostly interest0 -
so i pay 15.9 percent every month and not over the whole year?0
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if the APR is 15.9 then surely i should pay 15.9% annualy? £27k is not 15.9% more than £16k... It is very confusing.0
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No you'll be charged 1.32% a month on 16000 that would be around £192
As that will go down each month a little more of the balance is paid off0 -
i was paying 285 pm for 7 months... less than 120 off the total loan paid!?0
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i was paying 285 pm for 7 months... less than 120 off the total loan paid!?
It's too late for maths
But you are charged monthly (possibly daily) interest on the balance at that point. Your payment was paying just a little bit of the principal each time the rest was covering interest.0 -
thanks, i have a better loan on the way at 3.1%. I was just checking i wasnt going mad as it seems rediculous to only pay off less than £120 after repaying £2000. Lesson learned.0
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