Is it possible to get the Interest back on a loan?

StuC75

possibly the most obfuscated means of trying to explaining how a loan works.

In short they quote what repayments will be for the term that you want the loan for, give you the cash up front, and then as you pay your payment is a mixture of Capital (amount owed) plus Interest (what they charge for that).

They report with CRA's the total loan amount Plus interest and then show that balance reducing as you go.

That's what they report as that is how the account is; they wouldn't know if you intended to pay sooner. It also demonstrates on your credit file what your credit commitments are..

If you make early repayments then they do the calculation of how much interest you will have saved over the term of the loan and will then adjust the balance accordingly and recalculate what the repayments or term would change to. Since someone overpaying may want change either of those aspects..

Nearlyold wrote: »

It helps if you understand how the loan works as you make your payments.


If you borrowed £10,000 over 5 years at an APR of 6% you would have approx. £1500 interest to pay over the whole term assuming you are repaying the loan by regular monthly payments. The interest is not added to the loan at the outset though. The total cost of the loan is £11500 and your monthly repayment would be £191.66


At the start of the loan you owe £10,000, at the end of the first month you pay £191.66 reducing the debt to £9808.34, the lender then adds the interest on £10,000 for 1 month which is approx. £10,000 x .5% (the monthly rate would actually be slightly less than .5% for an APR of 6%) = £50 so you now owe £9808.34 + £50 =£9858.34.


Next month you pay £191.66 reducing the debt to £9666.68 the lender then adds interest for 1 month on £9858.34 x .5% =£49.29 so you now owe £9666.68 + £49.29 = £9715.97 and then each month the calculation is repeated.


If you ask for a settlement figure the lender completes a calculation as above and then adds 28 days penalty interest which gives you your settlement figure at that point

Nearlyold

StuC75 wrote: »

possibly the most obfuscated means of trying to explaining how a loan works.

Sorry if it came out a bit complicated it wasn't my intention to deliberately confuse or make obscure - which is the usual meaning of obfuscation

lee111s

I'm aware how loans usually work. I based my posts above on what I was told by the lender.

Thanks for the explanation though.

youmadbro

If you lent me money and I agreed to pay a pre set amount back extra to cover your expenses and then I tried to claim that money back later on what would you say? You'd tell me to get stuffed is what you'd say. Getting far too cheeky now all this reclaiming nonsense.

gazman100

youmadbro wrote: »

If you lent me money and I agreed to pay a pre set amount back extra to cover your expenses and then I tried to claim that money back later on what would you say? You'd tell me to get stuffed is what you'd say. Getting far too cheeky now all this reclaiming nonsense.

Not entirely a true analogy though. If you pay back the loan early there is no 'expense' in the remaining period of the loan hence the interest should be refunded. You'd normally find this in the T&Cs when taking out the loan so there's nothing 'cheeky' about it.

Agree that some of the reclaiming stuff is getting out of hand though.

youmadbro

Totally agree, just thought that would be the easiest way to make my point. I've no issue people claiming back when they've genuinely been wronged but I think something needs to be done soon about people taking advantage. If not I fear the banking system will collapse completely and that isn't something we would want despite what some people may think

Anoneemoose

Nearlyold wrote: »

Sorry if it came out a bit complicated it wasn't my intention to deliberately confuse or make obscure - which is the usual meaning of obfuscation

I understood it! And haven't really before. So thanks!

ViolaLass

StuC75 wrote: »

possibly the most obfuscated means of trying to explaining how a loan works.

Really?

It was detailed and long, yes, but perfectly clear to me.

andyfromotley

StuC75 wrote: »

possibly the most obfuscated means of trying to explaining how a loan works.

possibly the most misguided use of the word obfuscated.

StuC75

Not really..

to make obscure or unclear:
to obfuscate a problem with extraneous information.

Nearlyold gave an explanation that befitted a Credit Card account - Monthly payments made reducing the balance but with interest being added on.

A loan states up front the payment required, the term of the loan, what the total repaid will be and so what the charge would be.

When you over pay or look to settle early the lender will recalculate after taking into account an interest penalty what the new balance would be.

So the explanation didn't match how a loan works.

andyfromotley wrote: »

possibly the most misguided use of the word obfuscated.