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Loan Early Settlement figure - Is it right?
Hi all,
My husband took out a loan for £12k over 7 years back in 2009. The interest is around 19%. We are soon to be in a fortunate position in that we will be able to pay off the loan early.
He has checked his Noddle account and the statements. On both of these, the starting balance was £22,113. Is this called front-loading? I've read various things that suggest this isn't allowed.
Anyway, the remaining balance in February was £7084. In February, he called the loan company who said that the early settlement figure was just under £7k. Is this right? I would have thought that it would be less due to paying it off almost 2 years early.
Can anyone help?
My husband took out a loan for £12k over 7 years back in 2009. The interest is around 19%. We are soon to be in a fortunate position in that we will be able to pay off the loan early.
He has checked his Noddle account and the statements. On both of these, the starting balance was £22,113. Is this called front-loading? I've read various things that suggest this isn't allowed.
Anyway, the remaining balance in February was £7084. In February, he called the loan company who said that the early settlement figure was just under £7k. Is this right? I would have thought that it would be less due to paying it off almost 2 years early.
Can anyone help?
0
Comments
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It's not front loading. It tells you how much is payable if the loan runs full term.
There is, however, more interest charged at the start of the loan because the debt is higher.
How many payments have you made? How many are left?
Was there any deferred period at the start of the loan that will have increased the debt?0 -
I would have thought that it would be less due to paying it off almost 2 years early.
Can anyone help?
Interest is charged on the outstanding balance. So initially repayments are weighted towards interest with a minimal capital. Towards the back end of the term. Then the weighting is firmly towards capital repayment. That's the nature of loans.0 -
Yes, but the amount owing on the agreement included interest payable, so the settlement figure should be the remainder of that drawn down less the interest which would be payable in years 6 and 7.
I think the settlement figure looks too high. If you post which month the loan started and the monthly payment you will get a more accurate answerSealed pot challenge member #325
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