furious at little i've paid off!!!!

Matt16v

Depressing, isn't it!!

Wutang_2

Matt16v wrote: »

Depressing, isn't it!!

not really but comments like that are

MORPH3US

Come on OP, let us know answers please so we can help out.

R0bert_Sterling

There are quite a few of these posts.

Is it because people simply don't consider the total amount payable when they take out a loan??

Borrow £12,000 at xx.xAPR, Total amount repayable £19,000

After paying £xxx.xx each Month for a few Months people seem really annoyed that they owe more than the £12,000 they borrowed in the first place

Don't people understand they have actually borrowed £19,000 ???

vaporate

OP must of paid a hell lot of interest. :eek:

shafted_fpc

loopylou3 wrote: »

I took out an abbey loan 2 years ago for £12000 over 60 months. Have been paying £306 for 22 months which totals £6120. However, i received a statement today which says i've only paid £1616 off the loan and still owe £10384. Thats outrageous!!!!

YOu may wish to ask them how they atomise the loan, and what method they you for the calculation?

then come back with the answer, I will look out for this and try amd explain.

Matt16v

Wutang wrote: »

not really but comments like that are

How do you work that out? If you get depressed at things that i think you could do with seeing someone.

[Deleted User]

R0bert_Sterling wrote: »

There are quite a few of these posts.

Is it because people simply don't consider the total amount payable when they take out a loan??

Borrow £12,000 at xx.xAPR, Total amount repayable £19,000

After paying £xxx.xx each Month for a few Months people seem really annoyed that they owe more than the £12,000 they borrowed in the first place

Don't people understand they have actually borrowed £19,000 ???

They haven't 'borrowed' £19k. If the debtor fell dead tomorrow, the bank would be out of pocket by £12k, not £19k. £19k is the total cost to the debtor, but they have only taken £12k from the bank. The other £7k is the interest + profit the bank seeks for loaning that money. At most, the bank would have interest on the 12k if it sat in their account, but most of the £7k is their profit, which they didn't have in the first place.

I'd like to jump in and defend the OP here (partially) as this quote is a really good example of why for some people it's not that simple.

Firstly, you assume everyone is financially quite savvy, which we all know isn't true. We've all made mistakes - and there are lots of people applying for loans who just aren't smart. That's not to be rude or offensive to them, but to acknowledge that the average person in the UK doesn't have a PhD from Harvard.

In terms of your quote, say I borrow £12k like the OP.

While I accept that over the lifetime of the loan you'll end up paying £19k back, that's not how it looks to someone with the money in their bank account (I know, I've been there).

Some lenders apply the interest up-front in one go.
Other lenders calculate it daily and add it on quarterly
Other lenders calculate it daily and add it on monthly

I had two loans with two different banks (one was Abbey, actually) for the same amount: £10k each.

Bank 1 added the interest on at the start, so I owed £13k from the outset.
Bank 2 added the interest on in quarterly installments, so I owed £10k from the outset.

From the OP's original post, it sounds like he had the first type of loan, but for those without financial savvyness (which is their fault, I accept), it does look unfair. How can I have paid £5k towards my loan and the amount still be more than the capital sum I took out?

If people aren't bright enough to work this out then it's an easy target to accuse them of foolhardyness, but then if this level of financial acumen is 'par for the course' across the UK (which I think it is) then maybe there's an argument to suggest bank staff should do more to explain how the interest works to them. I certainly didn't have it explained to me, and I had to learn the hard way how a £10k loan I took out turned into £24k.

[Deleted User]

p.s. unless you've taken a payment window, I fail to see how the total loan balance should ever increase throughout the life of the loan?

If you add on interest, but you make monthly payments, then the monthly payments MUST exceed the interest otherwise you'll never pay the loan off, surely?

The only situation where the balance is higher than the starting capital sum is either where you've taken a payment holiday (where interest exceeds payments in) or else where the interest was applied up-front to the loan capital.

chalkie99

Deleted_User wrote: »

They haven't 'borrowed' £19k. If the debtor fell dead tomorrow, the bank would be out of pocket by £12k, not £19k.

That's a handy way out of it then :T. Maybe not the ideal situation for everyone though.

The point is, as R0bert Sterling says, that you have to repay £19k, that is your debt and there is not much advantage in conveniently dying to lower the amount.

Anyway, if you look at the OP's other posts you will see they have a history of debt problems and should have been a bit more savvy because of these