Confusion over loan repayments, interest etc

benali76

Hi.
In 2002 I took out a 5 year year loan of 13k at 7%. Nearly four years later I have about 14 months left and around 5.5k left to pay. However when I add up my monthly payments times 14 it only comes to 3.8k. Is this to do with the interest being added to the loan amount and then recalculated with each repayment? Will I still have payed it off in 14 months time? And the my main question is, is it worth my taking out a credit card with 0% on balance transfers for 12 months and paying it off now? When I phoned the bank i was told that to pay the loan off now would cost me 5.5k which suggests i wouldnt save anything by paying it off on a credit card.

Any help would be appreciated as im slightly confused.

jonesMUFCforever

Did you take out repayment insurance with the loan?
Do you still have your copy of the CCA agreement.
If your maths are correct and you only have 14 payments left make sure to tell the bank that you have made the 60 repayments and then tell them if there is any residual balance o/s then it is their loss.
They cannot vary the CCA once signed by both parties - if they set up the wrong amount it is their problem and their loss!
If however you close the loan off early you will let them off the hook as you will be given the outstanding amount as a redemption figure.

Up to you what do you want to do.

benali76

yes i still have my copy of the agreement and the figures are there in black and white. i didnt take out any form of payment insurance with it. Surely they can't have made a mistake with the sums, isn't it just something to do with the interest calculations that the amount of the loan now is more than ill actually end up repaying?

BigDunc

This loan calculator will allow you to work out how much you should be paying and your outstanding balance after each month - click on Show/Recalculate Amortization Table when you have selected the loan amount, term and interest rate. According to your figures above you should be paying about £257 per month and have an outstanding balance of approximately £3,500. Having said that, it could be that your loan terms and conditions allows the lender to charge you for all the interest they would receive, even if you pay off early.

What is your monthly payment currently?

benali76

thanks thats pretty much what my monthly repayment is. It sounds like your right, that the bank charge interest that iwould have paid if id kept the loan for the full term so it sounds like im stuck with it