HSBC Personal loan settlement calculation help required please?

bored_of_debt

jonesMUFCforever wrote: »

Because the vast majority of interest charged has already been paid - as other posters have indicated.

I was told maybe wrongly that the way interest was calculated was in line with, linked with or part of rule of 78 which has been changed in the favour of the customer since I took my loan?

CLAPTON

bored_of_debt wrote: »

Any ideas why the settlement figure given to me by the HSBC 6 months from the end of the 4 year term agreement was no better than if i'd repaid the loan monthly until the end of the agreement?

in month 43 interest is £16
in month 44 its £14
in month 45 its £11
in month 46 its £8
in month 47 its £5
in month 48 its £3

so although I'm not exactly sure of your figures... there isn't a lot of interest to refund .. so maybe you are owed £16 ..its difficult to work out exactly

bored_of_debt

I took the loan over 4 years, about 16k, when I got 6 months from the end I went in to a branch to ask for the settlement figure which was exactly the same as the total of the last 6 months payments. I tried to do a rough calculation using the quarter, half, three quarter settlement figures from my agreement docs (don't have figures to hand) and worked out it was front loaded, previously when paying off my loan early I suffered 2 months interest as a penalty but this wasn't the case here...

bored_of_debt

Oh and I forgot to mention I left it another 2 months which is why I may have mentioned 4 months previously...

CLAPTON

in the first month of your loan you owed 15,700
so the interest charged for that month was 15,700 x 8.56%/12 = £122
in that last month of you loan you owed only 385 so you were charged
interest of 385 x 8.56% /12 = £3

so yes its 'front loaded' in the sense that you pay more interest at the beginning of the loan but that's because you owed more then.

suppose you had 15,700 in one building society account and 385 in another would you expect the same amount of interest to be earned in both accounts?

bored_of_debt

I understand the concept completely but just thought there would be some difference between the two, I guess it's how they choose to select the two month penalty amout, I guess they chose a typical monthly amount from the earlier part of the loan...?

CLAPTON

No they are not allowed to do that

However, I can't work out exactly the interest because it depends upon exactly when the first payment was made in relation to the date the loan was made..., exactly when the last payment is made etc with such small numbers it's too diffciult for me to work out. (I only work to the nearest 100 or 2)

bored_of_debt

CLAPTON wrote: »

No they are not allowed to do that

However, I can't work out exactly the interest because it depends upon exactly when the first payment was made in relation to the date the loan was made..., exactly when the last payment is made etc with such small numbers it's too diffciult for me to work out. (I only work to the nearest 100 or 2)

Ok not to worry, I've settled it now but was still interested to know, thanks for your help today.