High Interest Nationwide Loan

jjdd2011

hi everyone some help required,

My question is my husband has a loan with Nationwide which has a rate of 16% I asked him to ring up yesterday to get a settlement figure so we could swap to a cheaper loan of 6% from sainsburys but the settlement figure is exactly what's left to pay off? how does this work.

the last statement we got shows that the interest is calculated daily and each month currently it gets around £135 interest. so why if we still have 3/4 years to go does it not pay to get out early.

is there any way round this I.e. paying off a lump sum?

we feel trapped.

HELP

BoGoF

How have you worked out how much still to pay?

When did the loan start, how many payments have you made and how much per month? What was the total sum repayable including interest? What was the settlement figure?

As an aside what makes you thing you will get the 6% offered from Sainsbury's? Only 51% of applicants will get this rate and the fact he got a 16% loan suggets his credit rating is not ideal?

CLAPTON

numbers and facts always help

Tixy

When you say the settlement figure is exactly whats left to pay off
- by left to pay off do you mean the balance on the last statement or the number of payments left multiplied by the monthly repayment?

jjdd2011

I have been offered the 6% loan from sainsburys my credit rating is very good my husbands wasn't when he took out the loan.
it was a 5 year loan 1 years worth of payments made.
I have a statement showing what's left from last month. and they told us over the hone the settlement figure and they've obviously charged us for getting out early is all I can think.
the payments are £246 a month from memory it's £10066 left to pay

jjdd2011

thanks Bogof I gathered that but i left the statements locked in my desk at work. I just wanted some outline guidance of other peoples experiences due to just getting the settlement figure.
I wondered if it was normal to have to pay more to settle.

BoGoF

It is possible early on in the loan as you haven't repaid much capital and they will add on 56 days interest (per the CCA 1974) to the amount outstanding.

In these situations, if you are allowed to overpay then make a lump sum payment to reduce the amount due then the 56 days interest is calculated on this reduced figure.

jjdd2011

I will get him to ring them back tomorrow and see if overpayments can be made.

Tixy

At a guess you are comparing the statement balance, net of interest to the settlement figure.

You need to compare the figure thats the total monthly repayments by the number of months left - that figure will be higher (because it will include the full interest), and so it does work out cheaper to pay off early.