Alliance and Leicester loan- Redemption Fee.

TheGaz1982

Hi,

My wife took a loan out with Alliance and Leicester 1 year ago- it was for £3,500 over 3 years at around 12%. Her payment are £115 per month and she has recently got her yearly statement with a balance owing of £3,000.

She now wants to pay the balance off.

1.) What would be the amount that she would likely have to pay?

2.) What is this a saving of, rather than paying it over the 3 year duration?

Any advise on this would be very much appreciated.

Regards,

Gareth.

BlueAngelCV

It will differ with each loan. Give A&L a call and ask them for an early settlement figure.

denibabe

hi ,assumming its says 12% APR and there are no added insurances the interest would be around the £640 mark over the three years so in the first year you would of paid around £420 in interest ,so if you clear it now you save approx £220 in interest but the easiest way to find out would be to ask them for a settlement figure,these figures are based on APR ONLY ,these figures would be totally different if it says 12% only known as (flat rate) you would save a fortune in interest .

TheGaz1982

Hi,

Thank you for your reply. Yes, I think that the interest was around £650 over 3 years, obviously they will be wanting to recoup some of it- so I will need to ring them for an accurate figure, but...

If I have made payments to date of £1,330.00 and only £500 has came off the blalance to take it from £3,500 to £3,000, is it possible the redemption would be less than this balance, as if I paid this balance then I would end up paying £4,300.00 in total!!!

Regards,

Gareth.

Robert_Sterling_3

The £3500 for 3 years at 12% is not consistent with a monthly payment of £115.
However the OP quoted a rate of around 12%.
The actual rate required to liquidate the loan in 36 months is 11.849% approx.
A lender would be allowed to call this 11.8% in writing and in more informal circumstances say it is around 12%.

The payments made in year one are

Capital Repayment .......... £1038.69
Interest .............................£341.31

Total .............................. £1380 i.e. 12 times £115

The outstanding balance is £2461.31

The lender may be allowed a couple of extra months of interest when you pay the loan off.

The interest in month 13 will be ................£23.08
The interest in month 14 will be.................£22.22

Robert

Robert_Sterling_3

denibabe wrote: »

hi ,assumming its says 12% APR and there are no added insurances the interest would be around the £640 mark over the three years so in the first year you would of paid around £420 in interest

You are correct about the £640.
I do not know how you managed to arrive at £420 in interest in year one.

Robert_Sterling_3

quote=TheGaz1982;
"I think that the interest was around £650"
The interest on the loan is £680

"If I have made payments to date of £1,330.00"
The payments in the first year are 12 times £115 i.e. £1,380
"and only £500 has came off the balance"
More than one thousand pounds has come off the balance.

Robert

denibabe

sorry robert got the figures backwards i ment aprox £220 interest in first year lol as it roughly £18 a month in interest and then i timesed it by 12, but clearly my mistake