I think I’ve over paid my loan!

Bike369

Hi Forum

Back in November 2005 I took out a loan for £28,000 over a period of 7 years – which included the interested added onto the balance.

Unfortunately due to personal reasons I fell behind with repayments and a default was then issued against the account in August 2011 for a sum of £12,000. Thankfully my life and career got back on track and in February 2012 I was able to settle the final outstanding amount. Therefore I paid all the £28000 34 months early.

Now then, as the £28,000 includes the interest the bank would have charged over 7 years this means repayments = £4000 per year or £333 per month.

As I paid off 34 months early is this £333 x 34 = an overpayment of £11322 !

Have I got this right??

Many thanks in advance

gazman100

In so many ways, no.

I presume this is just trolling?

[Deleted User]

You may have overpaid, but not by £333 x 34. Most of your early payments go towards the interest, rather than the capital.

You need to contact them.

Thrugelmir

Bike369 wrote: »

As I paid off 34 months early is this £333 x 34 = an overpayment of £11322 !

Have I got this right??

No. As interest is calculated on the balance owing at the end of every period (i.e. monthly).

gazman100

But that doesn't explain how a 7 year loan taken out in Nov 2005 settled in Feb 2012 is settled 34 months early.

Bike369

Trolling why???

Oh yes, sorry I mean November 2007

Bike369

Thrugelmir wrote: »

No. As interest is calculated on the balance owing at the end of every period (i.e. monthly).

Thanks for your replies. I thought is was too good to be true. I shall write to them but would like to get my figures right and dates ;-)

Is there an online calculator for such calculations?

Thanks gaz, I had 2005 in my letter I'm sending them so glad that got pointed out.

gazman100

Bike369 wrote: »

Trolling why???

Oh yes, sorry I mean November 2007

No problem then

Just your figures didn't add up at all and you do occasionally get people on here who do that.

Welcome to the forums by the way :beer:

forgotmyname

Unless you were paying £333 for the full term of 7 years, Even after clearing the balance then you wont have overpaid anywhere near that much.

Increasing the payment amount each month or paying greater sums off will have reduced the timeframe of the loan. And reduced the interest paid.

But add on any charges for early termination of the agreement and charges for late payments and added interest you may find it fairly close to the original figure.

Big jug og coffee, Fresh batteries for the calculator and a few hours/days locked in a quiet room going through all the figures i think.

jonesMUFCforever

You also need to factor in the costs of missing payments - costs associated with going into default and getting judgement against you.

Bike369

gazman100 wrote: »

No problem then

Just your figures didn't add up at all and you do occasionally get people on here who do that.

Welcome to the forums by the way :beer:

Thanks gaz, I prefer to look like a numpty here than in the bank

Thanks all. I'll dig out my old paperwork and take it from there