question about front loaded interest

rigger_john

Hi I borrowed 6K from Nat West, which had the interest front loaded, so my question is are there any advantages in paying this of faster, would I have any of that front loaded intrest refunded?


Regards

TBeckett100

ask them for a settlement figure, this will be lower and show you the discount for repaying early.

Robert_Sterling

What is meant by "front loaded interest"?

thriftymomma

I though natwest loans interest was applied monthly?

Kavanne

thriftymomma wrote: »

I though natwest loans interest was applied monthly?

It is now. But that only applies for loans started after about March 08. I think. Maybe a bit earlier or later.

thriftymomma

Interesting to know. Thanks for that.

rigger_john

TBeckett100 wrote: »

ask them for a settlement figure,.

Hi thanks for that, unfortunatly paying it off in one lump isn't an option for me, I was hoping that if I made extra payments there might be an advantage. I suspect however that as everything owing is calculated up front as it were that wont be the case.

CLAPTON

rigger_john wrote: »

Hi thanks for that, unfortunatly paying it off in one lump isn't an option for me, I was hoping that if I made extra payments there might be an advantage. I suspect however that as everything owing is calculated up front as it were that wont be the case.

just for clarity

Any loan taken out after may 2005 (and many before that) is regulated by the CCA which specifies how early settlement is dealt with...
i.e. how much the lender can charge for early settlement (i.e. a maximimum of two months interest).
So it would be incorrect to say the loan is front loaded although the paperwork may look as if it is as the CCA also says the total charge for credit must be shown.
The loan agreement should clearly show you the cost of settling at 1/4, 1/2, 3/4 of the way through the loan for illustrative purposes.

However, the CCA rules say nothing about part (overpayments) .. that's entirely up to your loan provider so I'm afraid you will have to read their T&Cs and see what they say. Often those allowing overpayments describe their loans as 'flexible' but that's not always the case.

poppy_f1

my experience with RBS
i applied for a 5k loan over 2 years with NO ppi payments were 225 per month this was in Sept 07
in May 08 i paid off a lump sum off about 1200 my payments remained the same but the term would obv decreased
luckily in around Nov 08 i was able to pay the loan off completely outstanding was about 900 but when i called up for a settlement figure it was about 800 so saving 100 in interest but paying off about 4 months early

however my only gripe was i had to visit the branch to pay esxtra/loan off as it couldnt be done over the phone or online