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    Front loading interest on personal loan
    • #1
    • 20th Apr 10, 6:39 PM
    Front loading interest on personal loan 20th Apr 10 at 6:39 PM
    Can someone give me some advice?

    I took out a loan in January to refinance car finance with an HP company so that I would be able to sell my car more easily at some point this year. Not very Money Saving but as it is my 30th Birthday this year I want to treat myself to an old Lotus Elise as I've wanted one since I was a child!

    On calling my bank to see if I could increase my loan by 2000 so I can afford the Lotus, I found out I would have to refinance the entire loan, and given that I had only recently taken out the loan, my interest rate would rise from 8.4% to 10.5% ish.

    I then decided the best option would be to get a new loan elsewhere, however I discovered that if I was to repay the loan, as the interest is front loaded, despite paying 400 in repayments, I have only effectively reduced the balance by approx 25. Is this right?
    Shouldn't the interest be reduced if I haven't had the loan for the 48months I signed up for?

    Any advice on the best options for me would be greatly appreciated!

    Thank you
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