can someone work something out for me..

amjustagirl · 14 August 2011 at 2:56PM

My grandad has lent me 20k, i want to pay him back the same interest which would be 0.5% if the money was left in his savings acc. How much interest should i be paying him a mth?
Maths are not my strongest point.
Thanks!

somethingcorporate · 14 August 2011 at 3:01PM

Obviously the amount of interest would change as the capital amount outstanding falls.

How long are you going to pay it off over?

The amount you should pay per month for interest is:

Amount outstanding * (0.005/12) assuming you mean 0.5% interest and not 5%.

coldstar · 14 August 2011 at 3:13PM

repaying it over 5 years (60 monthly payments) is £337.59 per month
repaying it over 10 years (120 monthly payments) is £170.90 per month
Calculated on an HP 12C financial calculator

amjustagirl · 14 August 2011 at 3:19PM

No real time limit on paying it back, just as and when i can. Yes the interest rate is 0.5%

coldstar · 14 August 2011 at 3:33PM

0.5% of £20,000 is £100 so the first years interest would be £100

If you DONT pay any interst in year one the amount owed becomes £20100 (£20000 plus first years interest) 0.5% of £20100 is £100.50p so the second years interest would be £100.50

If you DONT pay any interst in year two the amount owed becomes £20200.50 (£20100 plus second years interest) 0.5% of £20200.50 is £101 so the third years interest would be £101

And so on!

If you pay £100 interest every year the amoint owed £20000 does not increase

opinions4u · 14 August 2011 at 3:41PM

Grandad could easily get 3%+ interest on his savings.

Perhaps you should be offering a higher rate!

McKneff · 14 August 2011 at 3:42PM

If Grandads £20K was in the bank it would be attracting at least 3% interest, thats a lot of money he is losing over the years you are going to pay it back in.

YorkshireBoy · 14 August 2011 at 3:50PM

Is Grandad in good health?

chanz4 · 14 August 2011 at 4:00PM

have you signed a valid cca....

scheming_gypsy · 14 August 2011 at 4:14PM

If your Grandad's saving account is 0.5% and that's what you've agreed to pay him back at, any other saving accounts aren't relevant although you'll need to discuss what happens when the interest rates rise. It may only be 0.5% now but it won't stay that low so you'll need to agree if you're going to repay it all at that rate or stay in line with his saving account interest rate.

geoffky · 14 August 2011 at 5:12PM

why 0.5% .. i am getting 5.5% on a lot more than twenty thousand...you need to pay more than 0.5% otherwise he is losing out with inflation at 4%..my bond is a five year one from Newcastle bs.two years ago..