Settled a loan 17 months early but no refund of interest

maccydee

I took out a loan with HSBC for £25,000 payable over 96 months. I have the terms and conditions and it states that the interest is calculated and payable over the term of the loan yet when I settled the loan 17 months early there was no interest refunded as the interest has been fully paid.

Surely this is wrong? I have contacted the financial ombudsman. Just wondering what people's thoughts were?

somethingcorporate

What did HSBC say?

jonesMUFCforever

I would say that interest is charged daily so therefore no refund is due.
You have saved a packet though through not being charged the full amount of interest had the loan run its full course.

opinions4u

You loan agreement will state a total amount payable assuming the loan runs its term.

Work out how much you've paid in total.

It will be less than the originally stated total amount payable. The difference is your rebate of interest.

Caz3121

did you get a settlement figure?

how does that compare with 17 x monthly payments

camuk81

Was the settlement figure including the interest?

maccydee

I had no rebate on interest paid. Basically the interest had been fully paid 17 months early. My settlement figure made it so that I paid the full amount of 32k.

opinions4u

maccydee wrote: »

I had no rebate on interest paid. Basically the interest had been fully paid 17 months early. My settlement figure made it so that I paid the full amount of 32k.

What's the APR?

Did you have PPI?

How many payments did you make?

How much were they?

What was your settlement payment?

maccydee

opinions4u wrote: »

What's the APR?

Did you have PPI?

How many payments did you make?

How much were they?

What was your settlement payment?

My payments were 334 a month. My settlement figure was 17 x 334. I asked about the interest rebate and was told all the interest has been paid hence no interest rebate.

opinions4u

maccydee wrote: »

My payments were 334 a month. My settlement figure was 17 x 334. I asked about the interest rebate and was told all the interest has been paid hence no interest rebate.

I'll assume no PPI and an APR somewhere close to 6%.

If the settlement figure quoted was around £5,678 with 17 months left I'd be expecting at interest rebate of around £400ish (very rough guesstimate). Not a million miles off a monthly payment. EDIT: Most loans from that time will charge you two months interest as well. 2 x £35ish.

My best thinking says that the settlement figure given will have been right and you've probably miscounted the number of payments made.

Have you asked HSBC for a full breakdown of what you've paid and what interest has been charged? Have you compared this to the total amount payable?

What have the FOS said?

jonesMUFCforever

Has OP taken into account 2 months interest penalty for paying off loan early?