Egg Loan - confused about reduced APR

James_Bass

Hi all - hope somebody can help me!

I took out an Egg Loan for £7000 over 72 months in late December, APR 7.9%, repayments £121 (no PPI). Literally just days after I'd sent off my signed agreement I noted they'd reduced their rate to 6.9% as a special offer for January - needless to say I was a bit miffed!

I phoned and asked about paying it all off immediately and re-applying to take advantage of the reduced rate, and they said this would be fine as long as it was within 14 days of the funds being received. However, they also said they could apply the reduced rate as a "goodwill gesture", as no doubt it saves them a bunch of paperwork. They said they'd pop a letter in the post to confirm the new terms and I came away pleased.

The trouble is, I've not received that letter (despite querying it twice via email), and my account is showing as still having the repayments at £121 a month, even though it shows the new APR of 6.7%.

The only saving to me is that the end date of the loan is now November 2010 - a decrease of just two months, and a saving of just £242!

Now, I'm rubbish at working out APRs and stuff, and have sat down with a calculator to try and figure this out and failed spectacularly. Have they calculated this correctly? They didn't check with me whether I'd prefer a decrease in the length of the loan or a reduction in the monthly cost, and I presumed the monthly cost would go down, and by more than a total of £242 over 72 months.

So what's the solution? Have Egg done me a favour or are they pulling the wool over my eyes? I'm dead grateful for any answer here! Thank you!

Bagger

James

I did a quick calculation. Your savings over 72 months with the APR reduced from 7.9% to 6.9% is about £244. This number will vary slightly depending on how interest is calulated etc. My guess is that Egg have performed the calculation correctly and they are not trying to short-change you. Instead of changing the amount you are paying each month, they have simply reduced the length of the loan - in this case from 72 months to 70 months. Incidentally, if your repayments were changed, you would have been saving just over £3 per month.

Hope this helps.

Bagger

James_Bass

Cheers mate - I was just mixed up on calculations. Not a natural mathematician, me.