Calculating redemption figure

bill999

Hi I have an unsecured loan with 84 months still to pay.Original loan 10 years.

I am paying interest of £65 a month
I am paying loan repay £208 a month
I am paying a total of £273 a month.

The loan was taken out after May 2005 so there should be no Rule 78 charge.

I have an endowmment paying out next month so how do I calculate how much I will have to pay as a settlement/redemption figure?

Would it be £208 x 84 plus a couple of months interest penalty? Loan is with Northern Rock and when taken out did say no early redemption charges.

Thansk for any help.

Dealwithit

Request one:D

bill999

I did by phone and they quoted over £22000, which seemed very excessive.

That is why I asked the correct way of calculating.

Thanks anyway.

CLAPTON

how much was the original loan
and what is the APR
how do you know you are paying 65 per month interest

bill999

Hi

the original loan was for £25000 over 120 months and at a fixed rate I of 5.6%.

I have rechecked my figures:

I pay off a fixed amount each month and that is £271.41
Interest on laon is £7569.20 (£63.07 per month)
Therfore net (271-63 = 208.34

The loan agreement states: After 30 months your balance to pay the Total Loan would be £19973.58.

I would like to pay off in May which is the 37th month of the loan.

I would expect based on above to pay off less than £19973.58 so I am unsure why they quoted over £22000 a month ago.

Thanks Bill

Gorgeous_George

Using the cumprinc function in MSExcel, I make it that you will owe £18,904 after 36 payments. I used:

Loan £25,000
Rate 5.6%
Term 10 years

This gave a payment of £272.56 rather than £271.41 but that was close enough. After 30 months I make it £19,993.

5.51% would make your figures work (and their 30 months figure). You would owe £18,882 after 36 monthly payments.

GG

CLAPTON

bill999 wrote: »

Hi

the original loan was for £25000 over 120 months and at a fixed rate I of 5.6%.

I have rechecked my figures:

I pay off a fixed amount each month and that is £271.41
Interest on laon is £7569.20 (£63.07 per month)
Therfore net (271-63 = 208.34

The loan agreement states: After 30 months your balance to pay the Total Loan would be £19973.58.

I would like to pay off in May which is the 37th month of the loan.

I would expect based on above to pay off less than £19973.58 so I am unsure why they quoted over £22000 a month ago.

Thanks Bill

you don't, of course pay equal amounts of interest each month ... at the beginning of the loan you owe the full amount and so pay interest on that amount,; as each month goes by you repay a little capital back hence the interest gradually falls.... so you pay much more than half the intererst in the first half of the loan period

Anyway, the figure of 19,973 as a settlement figure after 30 months looks correct.

I would suggest you ask for a written settlement figure.

Robert_Sterling_3

I

I am trying to reduce my original post which had 44,000 characters approx.

After 30 month the outstanding balance is about £19,973.46

The interest rate is about 5.649%

If you mail me an email address I will send you my full explanation which was too long for an MSE posting.

The original reply included a table showing the capital balance at the begining of each month, the amount of interest each month, the monthly payment and the capital outstanding at the end of each month. All for each of the 120 months.

The actual interest in month one is £114.75

by month 30 it is £92.50

In month 120 the interest is £1.24

You were told your loan was at 5.6%

I say it was 5.649%

I think that the law allows you to give the APR correct to one decimal place.

So a lender can say the rate is 5.6% when in fact it would be more accurate to say it was 5.649%.



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