Cost of loan

Tino1970

Hi

I wonder if any of you can help me. I lent my father £5,000 to buy a car and he is insistent on paying me back plus some interest.

I'm not interested in making any money and therefore only want to charge him what this 5k would have cost me on the mortgage (approx 5.05%) over its 5 year duration. He paid me £100 per month for 60 months. I figure that the only cost to me is what I've lost by not repaying my mortgage capital.

Any ideas?!

Tino

Ian_W

Not quite sure what you're trying to acheive from what you've posted but how about this for a simple way of doing it?

£5000 x 5.05% pa interest = £252.5 x 5yrs = £1262.50 interest over the term.
£5000 + £1262.50 = £6262.50 divided by 60 = £104.38pm interest & repayment.

Suppose you could round it up to £105 or down to £104 depending on how generous you're feeling.

HTH.

mrcow

Ian_W wrote:

Not quite sure what you're trying to acheive from what you've posted but how about this for a simple way of doing it?

£5000 x 5.05% pa interest = £252.5 x 5yrs = £1262.50 interest over the term.
£5000 + £1262.50 = £6262.50 divided by 60 = £104.38pm interest & repayment.

Suppose you could round it up to £105 or down to £104 depending on how generous you're feeling.

HTH.

Yes, but that's a "flat" interest rate. If the OP wants to charge 5.05% APR, then the total repayable should be £5631 or £93.85 per month (over 5 years)?

Ian_W

Well there you go mrcow, rob me own mother, I would!!

But did you include the arrangement fee, valuation, redemption fee otherwise your APR is wrong? :rotfl:

silvercar

If you had repaid a capital sum of £5,000 off your mortgage you would have saved £21.04 in interest on each monthly payment = £1262.50 in total over the 5 years.

He has already repaid you 60 x £100 = £6,000.

But you could have used the £100 he paid you each month as an extra capital repayment on the mortgage so you would have clawed some of the £1262.50 back.

I think the £6,000 you have so far received would be sufficient payment.

mrcow

Ian_W wrote:

Well there you go mrcow, rob me own mother, I would!!

But did you include the arrangement fee, valuation, redemption fee otherwise your APR is wrong? :rotfl:

You're so right.

And maybe some overpriced PPI thrown in for good measure??

To the OP, it was kind of you to lend the money to your father and I hope that the answers that you've had have helped. I too would say that £100 pm for 60 months would be a fair repayment, and would advise (as per your post) if possible to use this money to overpay on your mortgage (or any other debt that you may have at a higher interest rate).