Loan Settlement Figure

Cardinal-Red

Simply, my question is can a company get its loan settlement calculation figure incorrect?

Situation is this - unsecured loan, taken out in December 2006 for a 6 year repayment. Monthly payment is £441.14, APR is 8.0%. Only slight twist is that the loan didn't need to be repaid for the first two months.

All payments upto date, and have asked for a settlement figure, which came out much higher than I thought, at £14,022.74.

Now I've lost the original documentation for the loan, but I calculated the amount to be much less - however I can't look at the documentation to see how they calculate this (the lady on the phone said the actuarial method)

My question is, do these figures get generated by computers or is there an element of human input which could lead to an error.

Quick calculations show me that the remaining amount to be paid (34 * 441.14 = 14998.76) which is a 'saving' of only £976.02 over three years - does this seem low, or about right?

CLAPTON

assuming you borrowed 25,000
and you had two payment free (but not interest free) months
and you then had 72 payments to make
and you have made 37 payaments to date then
I would say you would owe about 13,500 as a settlement figure

Cardinal-Red

I get that too - either £13742 or £13389 (not quite sure whether I am in month 38 or 39) - and I added on 2 months of interest at the start before doing the calculations...

So is your answer that yes it could be wrong...?

jonesMUFCforever

2 months interest free meaning you start paying on 3rd month?
That interest would have been added to capital and interest charged on the interest so it may well be higher than the settlement figure you have been given.

Cardinal-Red

Yes that's right - first 2 months without payment, but I have assumed it was charged to interest so have started my calculations with a capital figure of £25,322.74 (which I calculate to be 2 months of interest on the starting sum)