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Tesco Loan, quick clarification on early repayment needed please

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moatmeister
moatmeister Posts: 324 Forumite
Part of the Furniture 100 Posts Name Dropper Combo Breaker
Lookedat other similar posts and now very confused by all this, hope someone cant point me in the right direction.

Just been accepted for tesco loan, 10K/5yrs/11.5% total £10000 + £3026 interest repayable, £217.10/month

Tried to get clarification from Tesco phone advisor but he was unable to answer the question although did offer to try to find out.

If I repayed early, say after 30 months, ie half the term what would be the total cost?

Is interest still front loaded?

How is this calculated?

When is the most cost effective point for early repayment?

Comments

  • if you settle early then you will have paid the interest to date then they will charge you an additional month(or poss two)interest
  • bengalknights
    bengalknights Posts: 5,021 Forumite
    Part of the Furniture 1,000 Posts
    The cost is usually plus 2 months interest so for 30 months you would pay around £1613 interest
  • moatmeister
    moatmeister Posts: 324 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    Cheers but is it done pro rata or do they front load the interest, ie for the first payment would it be for example £217.00 towards the interest and about 10p paid off the capitol or every month £190 + £27.10 interest? (random figures!)
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    in the early months of the loan you pay more interest simply because you owe more

    so in month one you owe 10,000 so you are charged
    10,000 x11.5% /12

    in the second more you owe a little less so the interest declines too

    so it's not front loaded but you do (obvioulsy) pay more interest in the early months that the later months
  • moatmeister
    moatmeister Posts: 324 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    Thanks

    was hoping for reply from you, you seem to talk sense on here!
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