Interest rate calculation help.

mey

Hi

About 3 years ago we had a new combi boiler installed. First National provided the finance. The figures are as follows:

Cash price £3385.75
Monthly interest 1.46%
APR 19.6%
120 payments of £56.00
Total credit £3215.75

Do these calculations add up?

Also, I need to mention that we pay more than the normal monthly payment as we missed some payments. Although it is up to date we just kept on paying more every month.

Any advise will be appreciated.

pinkneonmartini

no!

120 x £56 = £6,720!!!!! You've basically agreed to pay double

Tixy

120 payments - so over 10years
at 19.6%

Yep looks about right to me.

Use this loan calculator and its there abouts (the loan calc actually gives slightly higher repayments, and therefore total interest)
http://www.moneymadeclear.fsa.gov.uk/tools.aspx?Tool=loan_calculator

mey

So what if I pay more than the monthly payment?

Tixy

Well it depends on the agreement wording

It may be that it allows you to overpay extra but the interest is still the same amount so the total repaid is the same.

Or it may be that if you pay extra early they will reduce the total amount if interest you pay.

fairybird30

this would depend on the credit agreement, some do not allow overpayments as such, you would need to speak to the loan provider and find out what they have done, technically it should reduce your interest payable but it will depend on your agreement.

GeorgeUK

They don't seem to add up, but it looks like this is in yiur favour.

Monthly interest 1.46%
APR 19.6%
120 payments of £56.00
Total credit £3215.75

Monthly interest rate of 1.46% would be an APR of 19% not 19.6%

120 payment of £56 would not repay the £3215 at this monthly rate. You would have repaid 6720, leaving 306 outstanding.

If this is what they are asking for then it is all in your favour so would not argue too much with that.