Co-Op loan interest on interest is it right?

puregeordie

Hi People,

Right this is my first loan with the co op and the last!

Got a loan for 8k to buy a car, over the telephone at 7.4% 6 months ago and agreed to the fixed payments of £159 over 5 years, Got the paperwork through and chucked it in the drawer as you do, well as I did!!

Paying the payments quite happily over 6 months then all of a sudden today got an interest payment of £270 on top which apparently is the norm as the woman said on the phone when I quieried this.

Checked the paperwork and yes they were right I pay interest of 7.2% ontop of my fixed payments which I've just never heard of , unless this is the norm now for loans?

No wonder the banks are loaded!!

They didn't say this on the phone when I got it out with them either. I bank with them also.

Do I just take the hit as I have now learned from my mistake in getting it out or is it worth complaining?

Also will I pay it off in 5 years?

I think this is shocking and I'm thinking about complaining and closing my account,

Any help advice appreciated.

Cheers.

puregeordie

OK,

Got a loan for £8000 over 5 years at 7.4% at £159.18 per month.

I also get fixed interest applied for the duration of this loan at 7.2% per annum. I get interest charged every 6 months. I have just been charged £270 for the first 6 months and obvoulsy it will go down as I pay it off.

I didn't know they did this.

I thought I'd just pay £159 every mointh and thats it but obvioulsy not!!

Shocking,

Thinking about it, it sounds more like a loan at about 14.7%..eek!

Cheers.

DCFC79

puregeordie wrote: »

OK,

Got a loan for £8000 over 5 years at 7.4% at £159.18 per month.

I also get fixed interest applied for the duration of this loan at 7.2% per annum. I get interest charged every 6 months. I have just been charged £270 for the first 6 months and obvoulsy it will go down as I pay it off.

I didn't know they did this.

I thought I'd just pay £159 every mointh and thats it but obvioulsy not!!

Shocking,

Thinking about it, it sounds more like a loan at about 14.7%..eek!

Cheers.

Is the 7.2% detailed in what you received in the post ? The stuff you put in the drawer.

opinions4u

Has the £270 been taken out of your bank account?

Or have you just received a loan statement showing payments made and interest accrued?

£8k x 7% = £560 a year divided by 2 = £280. Looks about right to me.

molerat

http://www.co-operativebank.co.uk/cfscombi/pdf/MKT2585F_WEB_Typical.pdf

Once agreed the APR is fixed and guaranteed for the life of the loan. Interest at the rate shown on the Loan Agreement will accrue on the daily outstanding balance of the Loan and be debited to the Loan Account half-yearly and immediately before repayment.

puregeordie

DCFC79 wrote: »

Is the 7.2% detailed in what you received in the post ? The stuff you put in the drawer.

Yes, But they didn't say it over the phone, Also if I bloody read it and digested the small print I would not have gone ahead with it.

The co-op woman said that this is what they do know?

I remember in the old says for sure that this didn't happen!

Botton line is that its my fault for not reading it but like I said I just thought I'd pay £159 for 5 years and that's it

Thanks.

opinions4u

Botton line is that its my fault for not reading it but like I said I just thought I'd pay £159 for 5 years and that's it

And you will. You haven't paid the £270 as an extra payment. You borrowed £8k. You will repay close to £9600 (£160 x 60 months). £1600 is interest. £270 is part of your interest.

ViolaLass

puregeordie wrote: »

I get interest charged every 6 months. I have just been charged £270 for the first 6 months and obvoulsy it will go down as I pay it off.

I didn't know they did this.

You didn't know they would charge you interest?

molerat

You are not paying extra or the interest twice. It is calculated daily on the reducing balance and added to the account every 6 months.

puregeordie

Oh, Have I just made myself sound like a dumb nooby!:o

I thought that I had been charged another £270 as I looked at my balance online.

Can I stop panicing now.

Thank you again.

Si.

puregeordie

Just had a look on the small print and just to clarify what you say is right:

it says,

£8000 duration 60 months, Total amount payable £9564.37

£159.18 APR 7.4%

The fixed interest rate will apply for the duration of the loan. Interest will accure on the daily outstanding balance of the loan and will be debited to the loan account twice a year at 6 months intervals from the date the loan is first paid to you and immediatly before repayment. The total amount payable and the APR assume all payments are made

Total charge for credit £1564.57

Rate of interest per annum 7.270%


PS,

I just thought I would get charged 7.2% on top of 7.4% meaning that I'd pay 7.2% each 6 months on the OS balance.

So I'm wrong!!:o

Thanks again,