Tesco Bank loan.. early interest payments?

lee111s

My loan with First Direct. They apply the interest at the start of the loan. If you repay the loan early, including all of the interest, they then calculate the amount of interest you have saved by paying off early and then refund you that amount.

So my loan of £11500 had an outstanding balance of £12669 when I took out the loan. If I paid it off in full 30 days later then they would charge me one month of interest ( about £30) and then refund me the remaining £1139 of interest that I saved by paying off the loan early.


The above doesn't include the 58 days interest they are entitled to charge if you pay off the loan early. However you can get round this by paying off all but 1 months payment. Your next monthly payment will then clear the loan on their system in a different way which won't result in the 58 day interest charge being levvied.

redpete

ef1888 wrote: »

... in the t&c's it said something along the lines of you will pay most of the interest at the start of the loan. I should have taken more advice at the time before signing on the dotted line. However, it does seem a bit unfair so I'm gonna re question it.

No point questioning the way that loans and interest work by their nature. At the beginning you owe most money so you pay more interest, at the end you owe much less so pay very little interest.