Loan info regarding early repayment

odb_2

About to get a £5k loan over 48 months, A&L, 8.9%. However looking at the paperwork the early repayment amounts seem insanne, if halfway through the loan I want to pay it off then its £550 for every £100 borrored, so that would be about £1200?? I.e half way through Id have to stump up £3.5k+ to pay it off? Is it me or does that seem rather high?

What about if I just want to pay off a chuck, £500 say as a one-off, or maybe up the payments - is that possible?

Sorry never had a loan before other than the big M!

Obv I could ring the bank but on a course tomorrow so not possible and they are closed now.

Really appreciate any replies.

CLAPTON

Perhaps you could post the exact words used in the agreement...

I think it will say that you repay 550 for every 1,000 borrowed... which would be about right.

di3004

odb wrote: »

About to get a £5k loan over 48 months, A&L, 8.9%. However looking at the paperwork the early repayment amounts seem insanne, if halfway through the loan I want to pay it off then its £550 for every £100 borrored, so that would be about £1200?? I.e half way through Id have to stump up £3.5k+ to pay it off? Is it me or does that seem rather high?

What about if I just want to pay off a chuck, £500 say as a one-off, or maybe up the payments - is that possible?

Sorry never had a loan before other than the big M!

Obv I could ring the bank but on a course tomorrow so not possible and they are closed now.

Really appreciate any replies.

Hi there

I don't generally post on loans itself but on this site you can also check out for cheapest loan offers, here is a link here:
http://www.moneysavingexpert.com/loans/cheap-personal-loans

And of course its worth shopping around as well, and also just to let you know you have "not" got to take out their insurance if you don't want to, this should be optional and you can purchase a cheaper "stand-alone" protection to cover your repayments, you can also check the insurance in the above red box, (top of page).

So you have actually sorted out this loan then or not?

Good luck and hope someone can give you some help in regards to your post.;)

Di

odb_2

Not signed the document yet - rate seems fair just the settle up costs seem odd to me, but maybe this is normal? Can you not pay lumps off as and when or overpay? Would that site show me these details, usually they just compare rates?

CLAPTON

You haven't replied to my earlier comment...

however, settlement figures are determined by regulation and assuming I was correct in my earlier post then the settlement figure half way through is fair.

However, there are no regulations that require the lender to allow overpayments... you need to check their T&Cs carefully.

odb_2

Sorry didnt see that first reply. Yes that is exactly what it says, £550 for every £1000 borrowed. Does that not seem really high given the total interest is only £900 on £5k!?

Not taking out any insurance - the loan is for a car and I'm making up the rest with cash, if anything bad happens I can just sell the car and easily cover the loan as it will be worth more.

CLAPTON

You have borrowed 5,000
so 550 per 1000 after half the payments is £2,750 ... why do you think that is high?

Do remember that you pay more interest in the early days of the loan as the interest is calculated on the outstanding balance each month... so obviously in the early months you owe more and so pay more interest

as time goes by, the balance falls so you are paying less interest and more capital... just like a mortgage.

So half way through, you will have paid more than half the interest and less than half the capital back (i.e. less than 2,500) so having to pay 2,750 to clear the loan seems very reasonable.

odb_2

Sorry I thought it was ON TOP of the amount, i.e pay back £1400 in fee's halfway through as well as the remaining balance of say £2.5k! Thats why I didnt get it, so stupid - sorry.