Simple Interest Personal Loan

Apples2

ozshell wrote: »

Therefore they have 'front loaded' the interest repayable (over the 4yr term) now, not adding it on monthly.

Only to demonstrate to you how much you are scheduled to repay on this loan assuming it runs it's course.

If they gave you a figure remaining which didn't include Interest, you would be pretty miffed when you ended up making more payments than you thought.

Why don't you ask them for a Settlement Figure? This will be a figure you would pay if you cleared it all in the next 30 days which will not include all the potential Interest payments you are scheduled to make.

opinions4u

ozshell wrote: »

My loan agreement states that the amount borrowed is £15,000 and the simple interest rate is 6.2%.

It's not quoting a simple interest rate. It's quoting an APR. Does it say APR?

The total amount repayable is £16,921.87 (therefore taking one from the other I assume the total interest payable for the term of the loan is £1,921.87).

Why assume? It tells you that's the total amount payable. So it is the total amount payable.

When I look at my loan balance online it shows £16,921.87, not £15,000, so they aren't using the standard form of borrowing where each month you see your balance - repayment + interest charged for the month, like they do with mortgages.

This is simply an online display. It isn't a settlement figure.

Therefore they have 'front loaded' the interest repayable (over the 4yr term) now, not adding it on monthly.

See above.

So when I use the simple interest rate of Interest = Principal * Rate * Term = £3,720, this isn't working because I seem to only be paying total interest of 1,921.87.

Why are you so focused on simple interest? Your debt reduces each time you pay. The amount of interest charged reduces each month. The APR is calculated based on this reduction.

MickHG

This May Help
You need the PMT Function.

[COLOR="RoyalBlue"][B]Row No [/B][/COLOR] [COLOR="RoyalBlue"][B]Col(A)       [/B][/COLOR] [COLOR="RoyalBlue"][B]Col(B)     [/B][/COLOR] [COLOR="RoyalBlue"][B]Col(C)              [/B][/COLOR] [COLOR="RoyalBlue"][B]Col(D) [/B][/COLOR]
1.      Loan          Rate +1     Mthly Rate           Term   
2.      15000         1.062       1.00502541213884     48     
3.                                                            
4.      Rep'nt/Mth    352.4852    =PMT((C2-1),D2,-A2)         
5.      Total Rep'nt  16919.2891  =A4*D2                      

Regards Mick

iolanthe07

A simple interest rate of 6.2% equates to an APR of around 13% - quite high for a personal loan of that amount. You might have done better elsewhere.