Loan help please

LAM2011

Please can you try and help me get my head around some numbers :

I have a Natwest loan (balance of yesterday £20,000 at 14.8% - balance of 4 years left). I have been overpaying bits and pieces up to approx £400 each month and then yesterday I over paid £780 and got charged £12.48.

I have just phoned to query as I was told I could overpay and to be honest it sounded like the rep on the phone couldnt answer so I have decided it must be because I have paid more than a certain amount.

However, she has offered to refinance the loan over the 4 years at 11.9% but says the amount outstanding is £21,264? apparently interest? My current repayments are £556.78 and new repayments will be £553.62 and apparently I can still overpay.

So, is this a good offer because at face value it seems I now have an extra £1,264 to pay off for not a lot less each month but I realise the interest rate is better. Is this a better option for me - I just cant seem to get the picture clear in my head!

Tixy

To settle a loan early they often charge a months interest. But if your balance is £20,000 exactly and they say you need to refinance £21,264 this sounds like more than just interest - I'd want an explanation of what it was for.

How long ago did you take out the loan? Be careful with taking out a new loan now as whilst they may say overpayments are allowed they are allowed to charge you for making those repayments (up to 1% of the overpayment), worth finding that out first before you make a decision if you anticipate you will still want to make overpayments.

If you can afford £556 and up to £400 in overpayments a month -and if you do choose the refinance option would it not be better to refinance the loan over a shorter period?

LAM2011

Many thanks for your advice Tixy. I tried with Sainsbury's to refinance over a shorter time but the answer came back no. (something to do with my let property that I own)

They are sending me paperwork which hopefully will show all the calcs. This loan has been ongoing and refinanced several times which is why I want to finally get rid of it.

Perhaps if I keep just making the small overpayments I wont be charged?

redpete

LAM2011 wrote: »

Perhaps if I keep just making the small overpayments I wont be charged?

I'm not sure that anyone can answer that without knowing the Ts&Cs of your agreement with the lender.

blacksta

Sometimes consoldating loans might mean a longer loan term and more interests to pay on the long run. do your sums carefully before committing to anything .

LAM2011

Thanks for all your input. I am not going to reloan - just had another call with bank. The extra £1,264 to reloan is an early repayment settlement figure and I am going to be charged for overpayments :mad: The £12.48 was for the £478 I made as extra payments over January and the £17.20 (another charge I discovered on Friday) was for the £780 overpayment. What is frustrating is that they cannot confirm what rate and on what basis I am charged but just that it is an interest charge! I have written to ask for my T&C's as it was all done on the phone originally.

I think I may have to wait a bit and try look around for another loan with a lower interest rate but it seems like most loans will charge for overpayments

Thanks again