How to work out monthly interest on a loan?

Got_No_Answers

Hi all

Can you help? I am looking at 2 of my loans and what to work out ways to pay them sooner.

One of my loans is at 16% apr. I have £5,061.71 left on it with 27 payments left. The minimum monthly payment is £186.10.

Now my wife has been able to round this up to £200 a month but when I called up the loan company to work out how much of the £186.10 a month is interest, the reply is "work it out yourself. We cant do those calulations" :rotfl:

Mmmmm ... ok a loan company saying they cant work out the interest on my loan. Doesn't bode well does it?

I tried to put it in a snowball calculator but kept coming up with a past payment date after the actual last payment date (Aug 14 actual - snowball date Feb 15)

As I am not brilliant with interest rates etc (which is another reason why my wife looks after the bills) can someone help me work it out?

Cheers

DevCoder

Interest = Capital Amount * Rate% * (Days/Currency Basis)

Currency Basis is 365 for GBP, 360 for EUR/USD and most other currencies

CLAPTON

approximately the interest paid in any month is
amount owing x 16%/12

so if you owe 5061 then the monthly interest will be about £67

this isn't exact as one needs to convert the APR to a simple rate before doing the calculation

also the figure you quote don't seem consistant
i.e. a debt of 5061 at 16%APR over 27 months would mean monthly repayments of more than 200 pm

DevCoder

I also calculate an capital + interest repayment amount which is in excess of £200 (£224.47) which kind of agrees with the snowball calculator.


Can you post the full terms, i.e. the original capital, the number of months/years and the rate (I assume static 16%).

CLAPTON

krisdorey wrote: »

I also calculate an capital + interest repayment amount which is in excess of £200 (£224.47) which kind of agrees with the snowball calculator.


Can you post the full terms, i.e. the original capital, the number of months/years and the rate (I assume static 16%).

Thanks
my figure is about 222; slightly different to yours but a lot more than the OPs figure

Got_No_Answers

Thanks for your help with the above :-)

I am also confused with the loan, which is why I needed the advice.

Loan was for £7,089 over 48 months. Deposit of £300 paid so £6,789. 48 payments of £186.10 for 4 years. This was all arranged via a vauxhall dealer when we purchased our car. It is not a hire purchase just a normal loan.

This is the email I got from the loan company:

"Thank you for your email. I can advise there are 27 payments remaining on the direct debit instruction – the balance outstanding at today’s date is £5067.84.

If you need clarification of the interest rate calculation we would advise you contact your local Trading Standards Officer who can explain this all to you face to face. You would then be free to ask any questions you feel need answering."

Also in a previous email:
"In response to your email we can advise the interest rate applied to this agreement if 16.00%"

With the advice from your posts, I can guess the interest rate monthly amount is approx £67 a month.

Ok I can work out the remaining bits

Thanks again

DevCoder

Amazing, a loan company who points you to trading standards for interest calculations.

It's their job and responsibility to provide you with such. As both Clapton and myself cannot agree with their calculation then I'd ask them for a breakdown of the calculation.

CLAPTON

well a loan of 6789 over 48 months at 16% APR does work out at round 188 per month so that looks ok

after 21 payments you should only owe about 4,300 ish capital

I think they have quoted how much your total payments would be if you continued to term i.e. 27 x 186.1 = 5024 which is about right ish

so the conclusion is that you are probably paying about £55 per month in interest



so that leaves the question ; why do you want to know?

Got_No_Answers

Thanks Clapton.

I am in the process of working out how much interest we pay on our 2 loans and this one was giving me a headache.

I have been given (FINALLY!!) some work :-D so I can start giving my wife some money to tackle our debt. Most people suggest tackling the highest interest ones 1st so our plan was to overpay by the interest total so the rest actually goes on the loan.

So if I give my wife £100 a month, this would cover the interest and a little bit over to help reduce this term.

Another funny comment they gave was:
"we are unable to calculate when your final payment will be if you make a regular overpayment of £13.90 a month (my wife has been paying £200 a month since Jan this year) as we cannot be assured you will make these regular payments. Should you have any further questions relating to your agreement, please refer to my previous email in relation to contacting trading standards."

Clapton - thank you again mate for clearing this up for me

CLAPTON

I'm not quite sure what you are doing, but if you are making overpayments in addition to your normal mopnthly payment then the overpayment will all go to reducing the capital balance

and yes make overpayments on the debt with the highest APR.