rule of 78

tomk123

I have a loan and I would like to calculate if I'm paying the correct interest and how much interest I'm paying per month.

the total charge the the loan is 12546.00 for a loan of 10,000

monthly payment is 209.10 permonth

itsays in one place the interest rate is 9.05%

but in another place it says the apr is 9.0%

the loan is paid over 62 months

i asked for a break down of the loan but it only shows the mothly payment and the amount left to pay not the interest paid per month.


after the 10 payment the amount left to pay is 10455.00


after the 15 payment the amount left to pay is 9409.50


after the 19 payment the amount left to pay is 8573.10



i have tried to use free calculators online but none seem to work.

zppp

tomk123 wrote: »

I have a loan and I would like to calculate if I'm paying the correct interest and how much interest I'm paying per month.

the total charge the the loan is 12546.00 for a loan of 10,000

monthly payment is 209.10 permonth

itsays in one place the interest rate is 9.05%

but in another place it says the apr is 9.0%

the loan is paid over 62 months

i asked for a break down of the loan but it only shows the mothly payment and the amount left to pay not the interest paid per month.


after the 10 payment the amount left to pay is 10455.00


after the 15 payment the amount left to pay is 9409.50


after the 19 payment the amount left to pay is 8573.10



i have tried to use free calculators online but none seem to work.

The interest is not equally spread over the loan, which is why it is so difficult to place a figure on. Towards the start of the loan you pay more off in interest than capital, and as you you go through the loan, this swaps so at the end you are paying the majority capital.

There will be 2 rates on the agreement, one is the AER and the other is the APR. The APR is widely used for comparing the loan and should be larger than the AER.

Your monthly interest is £41.06 according to my calculations, however, this is simply dividing the total amount repayable by 62 reps. Perhaps you could ask for the loan company to send you a statement? As long as the loan is not front loaded you shold be able to see the interest debiting.

somethingcorporate

zppp wrote: »

As long as the loan is not front loaded you shold be able to see the interest debiting.

Given after 10 months the amount left is higher than the amount borrowed would this not suggest that the loan is front loaded?

zppp

somethingcorporate wrote: »

Given after 10 months the amount left is higher than the amount borrowed would this not suggest that the loan is front loaded?

Front loading the interest has no bearing on the settlement calculation I think you'll find

Common_Sense_2

Best thing to do is look at the FLS leaflet "Repaying your Loan Early"

Find it here: http://www.fla.org.uk/consumer/documents?page=3

note that the Rule of 78 ended on 31st May this year