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

loopylou3

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!!!!

PasturesNew

Why is it outrageous?
What was the APR?
Roughly speaking, the figures above indicate you might have been paying 17.5%, or maybe you took out loan repayment insurance?

It's not outrageous though, it is simple mathematics and compound interest.

More information would be needed to establish if it were outrageous, wrong, right or just annoying.

Wutang_2

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!!!!

Have you not made the obligatory phone call to the loan company to confirm that you have also been paying interest? (unless it was interest -free?)....and that resultinigly your loan will be paid off within the agreed term (60 months) as stated initially when taking out the loan?

Rafter

If the APR on your loan offer is c.19.8% then Abbeys sums are right. In the early years most of your payment is interest, in the later years, most of it will be paying off the loan amount.

If your APR was less than that it is highly likely you have been paying for loan insurance. If it was suggested that this was compulsory to get the loan and you didn't really want it, you probably have a strong misselling case.

R.

MORPH3US

As PasturesNew said, you are either paying a very high interest rate or have PPI on your loan (or have you missed a payment and had charges added to the loan?)

Either way, they should have given you all of the details before you took the loan and you agreed to them so not sure what I can say.

You need to find out more details (or post them up here if you already have them) so we can help.

What was the loan for.... a car?

snappy2004

I have always believed that usually the repayments in the early part of a loan will go towards paying off the interest.

[Deleted User]

Why is it outrageous? Its a simple mathematical fact. They havent made up this figure, its calculated by a mathemcatical formula - FACT.

_Andy_

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!!!!

Could you clarify why you feel this is outrageous?

CLAPTON

snappy2004 wrote: »

I have always believed that usually the repayments in the early part of a loan will go towards paying off the interest.

well it works like this

at the beginning of the loan you owe all the money
towards the end of the loan you have paid off a lot of the capital so you owe less

when you owe a lot then the interest is more than when you owe a little (just in the same way that when you save you earn more money on a lot than you earn on a little )

so if you owe 12,000 and are paying say 19.5% APR and repaying 305 per month
then the first month you owe the 12,000 x 19.5%/12 = £179 in interest
so you repay 305-179 = 124 of the capital back

after say 24 payments then you will have paid back 3573 approx so you only owe 8425
so the interest in that month will only be 8,425 x 19.5%/12 = £126

etc etc.

Captain_Cochoran

It is depressing that people sign up to these loans without really understanding how the interest works, and are thus disappointed when they find that they have paid little off the capital in the early years. OP, it will all work out in the end, unless you have been ripped off with PPI.

[Deleted User]

Reckon OP could be a prime candidate for someone whos been sold PPI without them knowing....