Calling all math geniuses!!!

$17mma

I am trying to persuade my sister who has excellent credit to move her outstanding loan to a 0% card for 12 months and pay it off before the 0% thingy expires.

Whilst it sounds good to her I need her to see on paper what it is she will actually be saving.... sooooooo

I need someone to help me with the figures please.

Ok

Outstanding loan amount = £7500
Interest being paid monthly on the loan=12.5%
No PPI being paid (told her to get rid of it )
Her current monthly payments are=£265 per month
She can afford no more than £800 per month if she stops paying into her savings account.

Soooooooo going by these figures..

1. How much will she save in interest over the 12 months if she transfers to a 0% card
2. How much would this reduce her loan payment for e.g if she pays it early will she be paying all of it or will this be reduce because the time has been reduced
3. There is no penalty for paying the loan off early.
4. Finally can you recommend any cards that she can do a no charge balance transfer thingy to her loan? ( will check with the stoozing peeps)

Any help or comments are appreciated.

$17mma

gizmoleeds wrote:

Are you serious or is that a misprint? 12½% a month. :eek:

EXACTLY that is what i have been trying to tell her :eek: and that is with Scabby Abbey!

$17mma

ooopsss wait there she has corrected me!

12.4% :rolleyes: ..... geeze the non MSE's

magentadreamer

She needs to ditch that loan and fast if the APR is that much a month!

If £7500 is the final settlement figure an no early redemption fee's are added on then if she transfered it to a 12 months 0% card and didn't pay BT fee's then £7500 over 12 months is £625. Even getting it onto a normal card would save her if the interest is 12.5%per month -i'd check that as Abbey aren't known to be loan sharks.

$17mma

magentadreamer wrote:

She needs to ditch that loan and fast if the APR is that much a month!

If £7500 is the final settlement figure an no early redemption fee's are added on then if she transfered it to a 12 months 0% card and didn't pay BT fee's then £7500 over 12 months is £625. Even getting it onto a normal card would save her if the interest is 12.5%per month -i'd check that as Abbey aren't known to be loan sharks.

I was surprised as well with the interest amount and have told her to double check...I looked on their website and it says around 5% but that depends on the amount borrowed.

Oooh final settlement figure.. not sure if that is the final settlement figure but that is how much she says she roughly has left to pay.....

She is saying that she got a settlement figure in November and it was £7234.21 and she has made three payments since then so settlement figure should be lower by now.

$17mma

gizmoleeds wrote:

12.4% has got to be incorrect.

At that rate she would owe around £21,500 in 12 months time despite her monthly payments :eek:

Yikes.. she must have that wrong then. ................................................................................


wait there she is digging through her paper work :rolleyes: think we have got her attention

BigDunc

The site http://www.bankrate.com/brm/popcalc2.asp has a great loan calculator that includes what they call an amortization table, showing you how your monthly payment is split between paying off the capital and paying off interest. With the figures you have given us, the total amount of interest your sister will pay over one year will be in the region of £517.

$17mma

gizmoleeds wrote:

...in fact even paying £800 a month at that rate the loan would still have grown to £10,244 in 12 months time.

yikes!...

well she has dug out her papers and it says she is paying 5.4% per month phew :dance: ....... no it is not it is 12.5% per annum

A bit better but not better than 0%

$17mma

gizmoleeds wrote:

Even at 5.4% a month, if she pays off £265 a month then the loan will have grown to £9,531 by the end of the year. :eek:

If she paid off £800 a month then there would be £1,770 outstanding in 12 months.

If she paid off £800 a month on a 0% card then the entire amount would be cleared in 10 months.

She would save £1,757 over the period of the loan if she transfers it.

Are you sure it is not 5.4% a year?

doh sorry yes it is per annum not month.

$17mma

working out her figures 12.5% per annum makes sense then if she is paying £265 per month on a 10k loan with 7.5k left


or is my maths wrong again?

tomstickland

which, BTW are based on monthly interest being annual divided by 12, which may not be exact due to compounding

You are correct to do it this way.
Monthly rate = annual rate / 12
Gross rate ignores compounding.