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Explain my interest charges, please.
I have a loan with Lloyds TSB, and have checked my statement and my fixed interest seems to fluctuate. Some months I will pay more than previous months, despite my balance being considerably lower. Could someone explain to me why this is? At first I thought it could be because interest is calculated daily, and some months have more days than others, but then, even 1 day extra in the month, shouldn’t make the payment higher when I’m making repayments of £400 a month.
Could anyone shed some light on the possible reason? I’m sure there’s a simple explanation.
Thanks.
Could anyone shed some light on the possible reason? I’m sure there’s a simple explanation.
Thanks.
Adam's diary - My Debt Diary - The Challenge | LBM May 2010 with £23,343.35 | £16,141.46 to go...
Cleared: £7,369.16 / 30.85% | Current DFD: Oct2012 from Jan2014 | July repaid: £600/£800
Goals: Aug-11 37% | Nov-11 60% | Feb-11 67% | May-12 76% | Aug-12 86% | Dec-12 debt free
Cleared: £7,369.16 / 30.85% | Current DFD: Oct2012 from Jan2014 | July repaid: £600/£800
Goals: Aug-11 37% | Nov-11 60% | Feb-11 67% | May-12 76% | Aug-12 86% | Dec-12 debt free
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Comments
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What are the figures?loan amount period interest rate0
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It was an annual statement: £19,137.26 opening balance and 13.62% rate. Original loan over 84 months.Adam's diary - My Debt Diary - The Challenge | LBM May 2010 with £23,343.35 | £16,141.46 to go...
Cleared: £7,369.16 / 30.85% | Current DFD: Oct2012 from Jan2014 | July repaid: £600/£800
Goals: Aug-11 37% | Nov-11 60% | Feb-11 67% | May-12 76% | Aug-12 86% | Dec-12 debt free0 -
Some months have more days than others - sometimes a repayment date falls on a weekend or Bank holiday - swings and roundabouts it will even itself out over the course of the loan.0
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jonesMUFCforever wrote: »Some months have more days than others - sometimes a repayment date falls on a weekend or Bank holiday - swings and roundabouts it will even itself out over the course of the loan.
Thanks for the reply.
My monthly repayments are almost £400. Would you still expect that I could have higher interest charges than previous months?Adam's diary - My Debt Diary - The Challenge | LBM May 2010 with £23,343.35 | £16,141.46 to go...
Cleared: £7,369.16 / 30.85% | Current DFD: Oct2012 from Jan2014 | July repaid: £600/£800
Goals: Aug-11 37% | Nov-11 60% | Feb-11 67% | May-12 76% | Aug-12 86% | Dec-12 debt free0 -
Look carefully at the statement- I sometimes get this effect on my monthly mortgage stateemnt depending on the days repayments are taken and interest is charged there will sometimes be 1 interest payment and no repayment due to the end of the month falling over the weekend or bank holiday. The next month the situation is reversed0
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why not give the actual figures... makes it a lot easier but if you owe 19k at 13.62% apr then thats about £7.14 a day in interest
so one could easily explain variations of say between 25 day and 35 day per month (28 -31 real days, weekends, bank holidays etc ) so up to £70 would be expected0 -
Thanks for the reply.
My monthly repayments are almost £400. Would you still expect that I could have higher interest charges than previous months?
Your debt would fall to £18,701.48. That would mean £6.98 a day in the following month. If it's a 31 day month you would pay £216.38.
So although the figures I've used are generic estimates, and different banks have different charging periods, I would certainly expect there to be more interest charged in a 31 day month than a 28 day month in the first few years of such a long loan - even if the capital balance has fallen.0
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