how to work out interest on paying off loans early

nathdonn

Hi
Got a 4 year loan (7.4%) for £7000. If i want to pay the full balance in a year how do i calculate how much interest i have to pay???
Any help would be great!

McKneff

You cant because each company makes their own rules, some actually charge the whole lot, which you would have to pay if you didnt pay it off early, some also want an admin fee too.

Easiest way is to ask them.

nathdonn

surely no company can charge 4 years interest if you repay the whole loan after 1.5 years??!

Apples2

They used to...

They can charge a fee for settling early, it is "usually" about 2 Months interest.
This means you will save all the interest which will remain due apart from 2 Months worth.
When you are ready, give them a call and request an early settlement figure. Make sure you ask for a Settlement figure specifically or they will normally give you the amount outstanding.

The settlement figure should be in writing and will be valid for no more than 30 days (until the next payment is due).