Paying off Barclay loan early - How much will I save by doing so?

stayinganonymous

Hi,

I went into Barclays yesterday to ask how much it would be to pay off my loan and was a bit shocked at the figure.

So my loan started in June 2008, for 60 months at 21.742% ARP. I pay £159.34 per month. It is an unsecured loan without any insurance. So far, I have paid 44 payments at £7010.96 and if I continue with my loan full term it will be £9560.40. Right now I cannot say exactly how much I borrowed because my original loan actually started in January 2007 but in June 2008 I wanted to borrow an extra £700 and so the loan restarted or a new one created? or something like that. Anyway, my loan period is for 60 payments of £159.34 as of June/July 2008.

I was told that if I paid the loan off today I would have to pay £2252.00. So by paying off my loan 16 months early I would be saving myself about £297.44 than if I just continued with it for the next 16 months. I thought the settlement figure would have been less, but maybe I was adding up wrong and I also understand there is a fee included there, the lady said £52 of it. I guess the main reason I thought the repayment figure would have been less was because of my high interest rate, I thought saving myself 16 months of interest the balance would have been less than £2252.00 :undecided. £297.44 over 16 months is about £18.59 a month, I do not pay £18.59 a month interest, I pay a lot more.

I apologise in advance if I sound really stupid and have all this totally wrong! I am just so confused right now. I came away from the bank feeling really frustrated because I was also told I couldn't dispute a £100 charge (I have no idea what it was for) on my loan because the computer couldn't go back that far :mad: and also £40 was spent at iTunes (unauthorised transaction) and I was told that I wouldn't get any help with that because it was more than 120 days ago. My head's jumbled up and would like some help if anyone can offer me some, thanks.

I was 21 when I took out the loan, young and silly. If I got offered a 22% loan right now I would definitely say NO thanks!

Love2Spend1986

Id probably trust the bank's calculation on the early repayment figure. I'm confused by your mention of charges, how did you have an unauthorized transaction on a loan? have you asked for old statements to find out more about the charges?

CLAPTON

yes that's about right

whilst it true you are currrently paying about £37 ish in interest ; each month it is reducing as your debt is reducing;
so yes it averages out at about £18 per month

Monkeynut

While we're on the subject, rather than me starting a very similar thread -
I have a Barclayloan, only taken out in August of £7,500, 18.9% interest rate, so £192 ish a month, over 60 months.
Now I had no intention of keeping the loan over the full 5 years at such a high interest rate, so planned from the start to overpay along the way.
I'm sure I was told at the time of taking the loan out that if I was to make an overpayment I would be charged a penalty fee of 1 months interest. However when mentioning this to staff at a different branch last week they said they had never heard of this, and neither had the other 2 colleagues she checked with, and you could over pay whenever you wanted, however much.
So first, does anyone have any experience of this??
I'm sure it would be in the paperwork from when I took the loan out but we've moved recently and it's still boxed up somewhere

Also, and I'm sure you can't otherwise they wouldn't have the fees mentioned in the OP as no one would end up in that situation, but it seems so obvious that I have to ask..
If you can overpay however much when ever, then why can't you just when you want to settle it and pay it off in full, you just overpay by all but say 1 month or 2, and then let the DD come out for those as normal, and the loan just finish naturally that way?
This seems way too simple so I'm sure it is and I'm being a bit dense lol

pheonixrising21

Monkeynut - One way would be to write to them and ask the question, explain that you have been told by three separate people in branch that you can overpay but you want confirmation. If it comes back in writing that you can over pay, go for it. If they place charges on your loan for overpaying, you then have proof they said you can in writing so they should refund them as either the letter or the charges are their error.

If they say you can't overpay without a penalty charge, take the money you want to over pay, put it in an isa, earn some interest and when the isa balance equals the settlement figure on the loan, pay it all off. That way you will only get one penalty charge, which should be a hell of a lot less than the money you will save in interest by paying early!

Not saying thats the best thing to do (i've never dealt with Barclays), but its what I would do