Early settlement on loan query

Marlowsa

I hope somebody can give me some advice as financial matters leave me a little confused :think:

I took out a personal loan in August 2012 for £8000 at 15.9%. Payable over 4 years.

I asked at the time whether i would be able to make over payments to reduce the length of the loan and they said yes.

My credit rating has since improved and i have just been accepted for a loan for £8000 at 5.1% which i am going to use to pay of the previous loan.

I have been reading on this forum threads on early settlement figures and making over payments to reduce the amount of interest payable.

I have phoned the bank and they have quoted me a early settlement figure of £7150. I then asked for the outstanding balance which was £8600. As i have already paid £1980 i was hoping that that settlement fee would be lower as i am paying it off sooner.

Any help and suggestions would be very gratefully received.

Thanks

Samantha

CLAPTON

the settlement figure of 7150 seems reasonable

presumably you are paying about 220 per month

the interest at the start of the loan will be about 8000 x 15.9%/12 so about £100pm and reducing each month so much of your 1980 has gone in interest

Marlowsa

Thanks very much for the advice much appreciated.