Natwest Loan - dodgy deal?

cjbilly

Hi there,

I'ver got a 10k Natwest loan that was a quite a competitive rate when it came out 18mths ago (6.5%)...

Being moneysaving I wanted to overpay on this loan as my salary has increase but the sneaky people at Natwest add all the interest on the 10k immediately (worked out something like 11,750 in total) so makes _no_ sense in repaying this early...

That's my logic - or have I got it wrong and could I transfer this to a 0% CC ?

Thx - Cjb

CLAPTON

what exactly do the T&Cs say about early repayment?

mountainofdebt

I think it all depends on when you took out the loan - if it was before 31/05/06 then your loan would be covered by the 'rule of 78' and although you can settle the loan early, you can't make overpayments....so if it was and you still wanted to repay your loan early, the only way I can see you doing it is by saving the overpayments that you would have made in an interest bearing account and then when you have sufficient, settle the loan in full.

(I think martin mentions a 5%+ interest account so if you saved the overpayments in this then, effectively you would only be pay 1% on the compariable sum in your loan )


See this for further details:

https://www.fla.org.uk/downloads/download.asp?ref=2404&hash=67de8f1d2dd86933532bd23099c09ab2

CLAPTON

rule 78 can apply up to 31/may / 2005 (not 2006),
so what do your T&Cs actually say.

cjbilly

Right - worked it out.

Natwest 'load' the interest on the front of the loan. So when you see the balance either in branch or on the 'net - you see the figure with the interest on.

For example (rough - not sure of exact figs)

my 10k loan now has a balance of c.8k after 18mths (repaying 195 per month) - this is because the 10k was front loaded to approx. 11,750

if I repay this loan in full (you can't make overpayments) the actual figure would be 7300 (rather than the above 8k)

I don't know if this is 'rule 78' but it's not the most intuitive loan structure.

Hope this helps someone out.

Thx

Cjb

Dr.Shoe_2

I was pressured into consolidating the rest of my current loan and overdraft into a "top-up" loan. I asked what the interest rate was and was told (twice) that it was 12.9%. When the paperwork came it said 24.9%!

Lucky I checked!