Lloyds TSB Loan Query - Added interest every month!?!

nash_funk

Howdy Money expert people...

I took out at £16,000 loan in 2011 from Lloyds TSB, i took this out in branch and agreed a repayment of £355 per month.....fine i thought...

so have been paying it for the last 2 years, it's currently down to £13,000 odd

Now whats concerned me is a recent statement Lloyds sent me on the loan, it appears to me as though as soon as i am paying the Monthly amount of £355, they then immediately add on £189 Interest which then negates my monthly payment and pushes the outstanding balance back up again!!

I have never missed a payment or taken a payment holiday. after reviewing the statement, my balance has gone from £16000 down to 15,000...14,000 Back up to 15.......down to 14, down to 13 then back up to 14!!!

Is this normal?? am i missing something or has the bank made an error!??

I though the monthly price i agreed to pay in the bank £355 was the only amount i'd have to pay and thus the loan would decrease? (the £355 including the agreed interest?)

HELP/Advice is much appreciated.

jonesMUFCforever

It is normal!
You pay more interest at the beginning of the loan and gradually as you pay more of the capital off the interest will decrease.

You are wrong in assuming that your repayment of £355 reduced the loan by that amount monthly.

Stupid_Question

nash_funk wrote: »

Howdy Money expert people...

I took out at £16,000 loan in 2011 from Lloyds TSB, i took this out in branch and agreed a repayment of £355 per month.....fine i thought...

so have been paying it for the last 2 years, it's currently down to £13,000 odd

Now whats concerned me is a recent statement Lloyds sent me on the loan, it appears to me as though as soon as i am paying the Monthly amount of £355, they then immediately add on £189 Interest which then negates my monthly payment and pushes the outstanding balance back up again!!

I have never missed a payment or taken a payment holiday. after reviewing the statement, my balance has gone from £16000 down to 15,000...14,000 Back up to 15.......down to 14, down to 13 then back up to 14!!!

Is this normal?? am i missing something or has the bank made an error!??

I though the monthly price i agreed to pay in the bank £355 was the only amount i'd have to pay and thus the loan would decrease? (the £355 including the agreed interest?)

HELP/Advice is much appreciated.

That's just the way loans work, look back over the statement, the amount of interest added should be going down each month.

nash_funk

ok that make sense, but the statement i have received shows the interest going up and Down!?

the interst breakdown is as follows :-
March - £196.04
April - £207.3 UP
May - £199.03
June - £203.18 UP
July - £194.61
Aug - £199.20 UP
Sept - £196.73
Oct - £188.28
Nov - £192.41 UP
Dec - £183.88
2013
Jan - £188.10 UP
Feb - £185.85

It just doesnt look normal to me? i thought interest rates were fixed on a loan agreement - or have i been incredibly nieve?

Stupid_Question

nash_funk wrote: »

ok that make sense, but the statement i have received shows the interest going up and Down!?

the interst breakdown is as follows :-
March - £196.04
April - £207.3 UP
May - £199.03
June - £203.18 UP
July - £194.61
Aug - £199.20 UP
Sept - £196.73
Oct - £188.28
Nov - £192.41 UP
Dec - £183.88
2013
Jan - £188.10 UP
Feb - £185.85

It just doesnt look normal to me? i thought interest rates were fixed on a loan agreement - or have i been incredibly nieve?

Multiply your £355 monthly payments by the term of the loan, technically the interest is all there at the start of the loan, its just added monthly.

I'm pretty sure your discrepancies are down to the legnth of the prior month - I'm open to correction here though.

opinions4u

nash_funk wrote: »

ok that make sense, but the statement i have received shows the interest going up and Down!?

the interst breakdown is as follows :-
March - £196.04
April - £207.3 UP
May - £199.03
June - £203.18 UP
July - £194.61
Aug - £199.20 UP
Sept - £196.73
Oct - £188.28
Nov - £192.41 UP
Dec - £183.88
2013
Jan - £188.10 UP
Feb - £185.85

It just doesnt look normal to me? i thought interest rates were fixed on a loan agreement - or have i been incredibly nieve?

There are a different number of working days in each monthly accounting period.

jonesMUFCforever

......And as you can see the trend is going down - first couple of payments interest was about £200 per month now it is around £185.
The more you pay the lower this monthly interest will become.