Question Regarding Loan And The "Total Repayable Ammount"

Marv02

[Sorry, I've hijacked my parents user-name because I was too lazy to create my own )

http://www.uswitch.com/loans/

OK, so I have a question... I wanted to take out a loan for £1000, I looked around on uSwitch and the results where:

18.6% APR for £1,000.00 = £49.53 p/m x 24 months = £1,188.72.

Now, here's what I want to know, and the main reason I'm asking this question. I'm a complete newbie when it comes down to banking, and the whole banking lingo, so my question is... If I where to take out the £1000 loan, and pay it back for 24 months, is the total END payment going to be £1,188.72? Or is there a bunch of hidden costs lurking around somewhere, out of the obvious? If so, can someone please tell me what the TRUE repayable ammount would be?

opinions4u

Assuming you pay all your payments when due, there will be no additional costs.

So the TAP is as stated.

Personally I'd recommend saving £50 a month for 1 year and 8 months to get the £1,000. That way you earn a bit of interest out of the bank, rather than them earning a lot of interest out of you. If you can build your outlook on life by saving, rather than borrowing, I predict a financially secure future.

Good luck - to paraphrase your question, "What's the catch?" is exactly the right thing to be asking before entering in to any financial arrangement.

Marv02

opinions4u wrote: »

Assuming you pay all your payments when due, there will be no additional costs.

So the TAP is as stated.

Personally I'd recommend saving £50 a month for 1 year and 8 months to get the £1,000. That way you earn a bit of interest out of the bank, rather than them earning a lot of interest out of you. If you can build your outlook on life by saving, rather than borrowing, I predict a financially secure future.

Good luck - to paraphrase your question, "What's the catch?" is exactly the right thing to be asking before entering in to any financial arrangement.

Thanks for the reply. The only reason I asked is, I read somewhere about monthly interest that will be added (but that could be for mortgages, not too sure) and wanted to clear that up because I've heard AER and APR, and all that other lingo that floats around.

I actually have money saved up of my own, the problem is, I need a little more (£1000 more) for car insurance. I'm very good with "saving" money, cash in hand so don't worry, I'm not another teen jumping into a spiral of never ending debt. Thanks for trying to look out for me though, appreciate that.

According to my calculations, it will actually work out cheaper for me.

My (cheapest) car insurance quote was £1095 if I paid up front, or £1495 if I paid monthly. So if I where to take out a £1000 loan, and only pay back £1200, then in the end, I would have saved £200, plus cut down the insurance bill to £40 a month, instead of £125.

Smart thinking, right? :cool:

Malky

Marv02 wrote: »

Thanks for the reply. The only reason I asked is, I read somewhere about monthly interest that will be added (but that could be for mortgages, not too sure) and wanted to clear that up because I've heard AER and APR, and all that other lingo that floats around.

I actually have money saved up of my own, the problem is, I need a little more (£1000 more) for car insurance. I'm very good with "saving" money, cash in hand so don't worry, I'm not another teen jumping into a spiral of never ending debt. Thanks for trying to look out for me though, appreciate that.

According to my calculations, it will actually work out cheaper for me.

My (cheapest) car insurance quote was £1095 if I paid up front, or £1495 if I paid monthly. So if I where to take out a £1000 loan, and only pay back £1200, then in the end, I would have saved £200, plus cut down the insurance bill to £40 a month, instead of £125.

Smart thinking, right? :cool:

Smart thinking? I disagree.
First you say you are good with money and you have some savings. You want to borrow £1000 and your insurance is £1095. You only have £95 saved up? Secondly, you're looking at paying 12 months insurance over 2 years. What are you going to do in a years time? Borrow again when you're still paying off the previous years insurance?
The way I see it is that you're going to be paying out £50 per month for two years but in 12 months time, you'll have to borrow again (unless you save up of course). Your £50 per month will maybe double but then you'll be paying off longer and you'll be further behind with your insurance if you see what I mean. Looking at the bigger picture, you'll be worse off in a year or two if you choose to continue borrowing.