Are my calculations correct?

Mule

I was reading through moozie's "To scared to work out what I owe" thread earlier and I came across some advice from Southern Scouser about how you calculate how much you owe on a loan. I took a loan from my bank 12 months ago for £20500 over 60months at a rate of 17.7%, paying £502.97p/m. I am going back to the bank soon to see if they can get me a better deal (according to internet banking they would give me a rate between 9.9-11.7% - better) and was wondering how much was outstanding on my current loan. According to internet banking it is 17500, however with SS's calculation I work it out to be £16399.99:

£20500 divided by 60months = £341.66p/m
£341.66 x 48 (the remaining number of months of the loan) = £16399.99

Is this correct? Any advice is appreciated.

Claireybear

Looks right to me!

Definitely search around for a better arte though, it looks like you are paying over the odds!

Claire

Mule

Thank you
I think that deal was all the bank could do for me at the time - with the proviso that I didn't borrow any more with them for 12months/had fixed overdraft etc. I think that those things must have improved my "scoring" with them as they have told me they can now get me a better deal (phew!)
Have tried with a couple of other companies over the year but to no avail.

jessicamb

Do you have any PPI? That is usually front loaded and interest bearing.

Mule

No I don't have PPI.

Do you think that it says I owe £17500 on internet banking becasue that is interest added on?

jessicamb

Mule

I've just put the details into the snowballer

http://www.whatsthecost.co.uk/snowball.aspx

and it looks like the bank is correct

On a loan of £20,500 it estimates 62 months to repay based on your payment of £502.97 month. During the time you will pay £10,335 in interest. The balance for 12 months in is about 17,500.

It is the interest being added on (which is correct - on a standard loan you are repaying interest at the same time as capital and you pay more interest than capital in the early periods of the loan)

CLAPTON

in addition to the point made by jessicamb
you need to consider the T&Cs of the loan...what you need to know if you want to get a new loan and pay off the old one is the current settlement value of the loan which may be different from the value on the internet.

Mule

Thank you Jessicamb. Shame the bank is right!! I was really pleased earlier when I did those calculations and worked out I owed over £1000 LESS!! (Or so I thought)

D'oh!:rolleyes:

Mule

Thanks Clapton I definitely need to check that out.