Settle Natwest Loan Early!

themarques

Hi guys I just wanted to know if someone can help me out. I took out a Natwest Loan with Natwest in March 2003 for £15K. I was told in the usual not so many words that I need payment protection or else. Having just joined Natwest at that time I got a really bad interest rate which see's me paying about £380 a month towards the loan.

I recently applied for another loan to consolidate this loan and also leave me with some extra to sort some other stuff out. I applied for 20k with a much better APR 6.8% over 5 years. I have since rang up Natwest to find out how much is required to settle the first loan and I was told £9578.

My question is, is this correct shouldn they recalculate the payment. I am going to try and find the inital agreement and see what they say. I have never missed a payment since March 2003 roughly £12,160.

illmonkey

Hi. I just settled a Natwest loan of £5k.

I was charged 2 months intrest, which wasnt much. I didnt have payment protection or anything either.

But your loan might of had different terms. Try to dig up the original contract maybe.

themarques

Ok I tried to calculate it manually and it drove me nuts (never was good at maths..

I found the origianl agreement and also having spoken to Natwest they spoke about the 2 months interest I would havt to pay.. so this is the breakdown.

a)£15,000 Loan drawn March 2003 for 60 months.

APR 9%

b)Insurance: £3614

The Credit: £18.614 (a+b)

The Total charge for credit: £4373.80 comprising interest.

Total Amount Payable: £22987 (WHAT WAS I THINKIN??)

60 Repayments of £383.13

Main Loan £308.74
Insurance: £74.39

So to date I have paid them £11.877 incl interest and loan protector. If I pay them tomorrow they saying the outstanding balance is £9578.

Does that sound about right to you guys seeing as I havent missed a payment.

Robert_Sterling_3

From you figures it looks as if you have made 31 payments already.
They want the equivalent of 25 more payments.
So even though you pay off when just past the half way mark they still expect 56 of the 60 installments to be paid.

Have you ask them to let you know how they calculated the redemption figure.

Rafter

Just done my own sums and can't get it exactly but within £100.

Unfortunately the PPI premium isn't applied evenly at £74 a month.

In month 1 they charge £118 and over time as the loan reduces the premium reduced to. Therefore 2 1/2 years in over 75% of the insurance has been paid, and much of the interest, which is why so much of the loan is still outstanding.

You basically get about £800 of your original £3,600 insurance refunded, and the balance is the loan outstanding less interest paid and payments made plus a couple of months penalty interest for good measure.

It is definately worth refinancing at a better rate though with 2.5 years to run.

Good luck.

R.

Robert_Sterling_3

It is not immediately obvious to me , though I do not doubt that you are right, that refinancing to a lower rate will be better than carrying on since much of the damage has already been done.
Could you indicate what the new rate would need to be to justify redeeming the present loan. off the top of my head I guess it would need to be about 5% or less.

themarques

Robert_Sterling wrote:

It is not immediately obvious to me , though I do not doubt that you are right, that refinancing to a lower rate will be better than carrying on since much of the damage has already been done.
Could you indicate what the new rate would need to be to justify redeeming the present loan. off the top of my head I guess it would need to be about 5% or less.

Thanks for all the info guys really appreciate it.

Robert the new APR will be 6.8% this time I have not taken the Insurance. I have also take 20K, 10k will be to pay off the original loan and the remainder to pay off other credit card bills etc.

Robert_Sterling_3

Thank you for the update.
I would now like to ask Rafter how much you have saved by closing the original loan and replacing the redemption amount of money by a loan of the same amount at 6.8%.