Confused on Loans

MA

Hi all, this one has really puzzled me  ???

My other half has two loans for which he has lost the paperwork.  We're trying to sort out his finances, and so went to the bank holding the loan as we want to repay these early to reduce the overall interest paid back.

To try to sort this we went for a meeting with the bank. After being told by the bank that they did not front load interest on the loans, they then told us that the total left outstanding was the early settlement figure, which if you "do the math" is the number of months left x the monthly payment.  Basically, he would be no better off financially by repaying now. This seems to contradict what they say about not front loading the interest.  We are unsure whether he has payment protection, but are pursuing that.

Basically we just want to pay the least back possible.  Any ideas how this situation could come about, and whether there is any way to get a reduction on the figures so that we can repay early and save money.

Thanks for reading and any help that you can suggest. I've read the articles and think that this means that the loans may be under "rule of 78" which i don't really understand, but any advice would be gratefully taken  :)

Does no-one have any ideas or suggestions on this? Anything would be helpful. Thanks again for all those who've read or who can supply any advice

MA

Bumping this up as I thought my edit might and it doesn't.

I'd honestly be grateful for anyones thoughts.

Thanks in advance

Margaret_Millne

Have you actually asked the bank "is the interest calculated under Rule of 78"? The very fact you ask tells them you know a bit about what might be going on. If it is, then there probably isn't much point in paying back early - you may as well save what you would have given them, and get interest on it instead.

Having learnt this, you will obviously ask the right questions in future

MA

Thanks MM. Did ask the person we saw, and she didn't know what we were talking about ??? and just wanted us to take another loan to consolidate these two - thus paying interest on interest in my opinion!

Will try again though. Thanks

weirdfish_2

If multiplying the monthly payment by the outstanding number of payments gives you your settlement figure then surely that means they DO front load the interest.