Loan: Early Repayment Penalty

nick3young

Hi All,

I purchase a car from Available Car with their finance option (provided by Barclays Partner Finance).

The total loan is £12,400 over 60 months. The interest rate is 8.9% and I pay £256 per month.

I'm currently 10 months into the loan and so, according to multiple online amortisation schedules, my balance should be around £10,695 (this is of course after interest has been taken into account).

I've just called the company for an early repayment figure and I have been quoted £11,400... I can't understand where the extra £700 is coming from?? I've not taken any PPI or anything daft like that.

I appreciate that there is usually a penalty for an early repayment but am I correct in thinking that this is limited to 2 months interest by law? If this is the case, with my monthly interest being around £90 the penalty should be around £180... not £700!!

The only other thing I feel is important to note is that on my loan paperwork, the interest is lumped into the total balance. So for example, instead of saying '£12,400 + interest', it simply says, '£15,444' total balance. I thought this was a strange way of doing things.

Any ideas anyone?

Thanks
Nick

CLAPTON

did you have any payment free months at the beginning of the loan

chris-j

Could be that loan interest is calculated in similar way to a mortgage where interest is calculated each day/month based on outstanding balance.. Not the same as the old rule of 78 which was a major rip off, but far more likely they do this than balance the interest over whole loan period.

dboy1985

CLAPTON wrote: »

did you have any payment free months at the beginning of the loan

it says that there are 2 months before the first payment is made

Peelerfart

Is 8.9% the APR or is it flat rate?

dboy1985

Peelerfart wrote: »

Is 8.9% the APR or is it flat rate?

8.9% is the APR

Peelerfart

addisonben22 wrote: »

Very easy for you. Go online and search for loans without documents or no documents loans because in these days it is very easy process by online internet. Now you can get online loans without any documents. So search online for loans and apply for loans.

Another one for the post count eh?

nick3young

Thanks for the replies guys. I feel a little guilty that I asked the question over a week ago and haven't been back with any input.

DBoy1985... I assume you have one of these loans also then? Are there 2 payment free months at the beginning of the agreement? I don't remember having this...?