Help with working out early repayment charges please ...

samika

Hi there,

Just wondered if anybody could help me please as maths isn't exactly my strongest point

We currently have a loan with RBS with £11,400 remaining and four years left to run of the original five year term. We pay £266.54 a month and the interest rate is approx 6.5%

The plan is to pay this off asap with additional payments of between £100 - £500 p/m, basically whatever we have spare to throw at it. There is an early repayment penalty though of one months' interest - how do I work this out please so I can factor it in to the snowball calculator thingymajig for an accurate overview?

Thanks muchly in advance

harrys_dad

Why not just ask them for a figure if you increase payments as suggested? Is 6.5% a flat interest payment on initial loan or APR on outstanding balance? If is is flat on initial loan then one month's interest is 1/12th of 6.5% of initial loan (I do not know what that was), i.e initial loan x 0.00541666666

samika

Thank you for your reply harrys dad. I had already rung the local branch this morning and they couldn't answer but have booked me in with a financial advisor next week. I am assuming that the quicker it's paid = less interest paid overall but just trying to work out the sums before my appointment to see if the saving is worthwhile