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Front Loaded Interest
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What you describe is an accurate description of Front Loaded Interest however it simply illustrates my point of how the term Front Loaded Interest is bandied about too much because the loan structure you describe is not available to consumers in the UK as its prohibited under Consumer Credit legislation.
Thank you. I was describing "front-loaded interest" and not commenting on the legality of it.
Just off the top of my head and without qualification, the Consumer Credit Act applies to loan agreements signed after 2005. After 2005 there are differences as to whether the account is in default or settled early. In settling early there is or ahould be an early settlement rebate. But if the loan is in default all of the capital and all of the interest is payable. We find that in demands for immediate payment in the case of a default.0 -
Thank you. I was describing "front-loaded interest" and not commenting on the legality of it.
Just off the top of my head and without qualification, the Consumer Credit Act applies to loan agreements signed after 2005. After 2005 there are differences as to whether the account is in default or settled early. In settling early there is or ahould be an early settlement rebate. But if the loan is in default all of the capital and all of the interest is payable. We find that in demands for immediate payment in the case of a default.
Oh I thought you were saying "Front-loading of interest is actually more common that we might think. We find it in personal loans, car finance, mortgages and across the whole finance sectors" - which of course is incorrect, my point is that lots of people say they have Front Loaded Interest when they don't0 -
Oh I thought you were saying "Front-loading of interest is actually more common that we might think. We find it in personal loans, car finance, mortgages and across the whole finance sectors" - which of course is incorrect, my point is that lots of people say they have Front Loaded Interest when they don't
Oh but they do.
As far as I know mortgages where the interest is paid separately from the capital amount, what is referred to as the "Principal", are still prevalent and given priority in the repayments schedule. Is that front-loading or not? Well, that's a very good question.
We should be concerned about the realities and not the legalities.
There are enough posts on enough forums which shows that front-loading of interest is prevalent especially in car finance.
Lastly, well lastly for this post, there is the distinction by the Credit Union Expansion Project from the DWP and supported by the Government's £38m injection of funds that Credit Union loans should not be front-loaded.
Personally, I think you are bogged down by the legalities while ignoring the realities. By your criteria we could equally claim that theft doesn't exist because it's illegal.0 -
Oh but they do.
As far as I know mortgages where the interest is paid separately from the capital amount, what is referred to as the "Principal", are still prevalent and given priority in the repayments schedule. Is that front-loading or not? Well, that's a very good question.
We should be concerned about the realities and not the legalities.
There are enough posts on enough forums which shows that front-loading of interest is prevalent especially in car finance.
Lastly, well lastly for this post, there is the distinction by the Credit Union Expansion Project from the DWP and supported by the Government's £38m injection of funds that Credit Union loans should not be front-loaded.
Personally, I think you are bogged down by the legalities while ignoring the realities. By your criteria we could equally claim that theft doesn't exist because it's illegal.
Nope not bogged down by the legalities. My point is
Your description of Front Loaded Interest is spot on
Your claim that ""Front-loading of interest is actually more common that we might think. We find it in personal loans, car finance, mortgages and across the whole finance sectors" is incorrect if you mean they are front loaded as you yourself describe it
There are lots of claims in the forums that "My loan was Front Loaded" but what they are really saying is I thought interest was evenly spread but when I asked for an early settlement quote halfway through the loan my interest rebate is much less than half the total interest payable0 -
Oh but they do.
As far as I know mortgages where the interest is paid separately from the capital amount, what is referred to as the "Principal", are still prevalent and given priority in the repayments schedule. Is that front-loading or not? Well, that's a very good question.
We should be concerned about the realities and not the legalities.
There are enough posts on enough forums which shows that front-loading of interest is prevalent especially in car finance.
Lastly, well lastly for this post, there is the distinction by the Credit Union Expansion Project from the DWP and supported by the Government's £38m injection of funds that Credit Union loans should not be front-loaded.
Personally, I think you are bogged down by the legalities while ignoring the realities. By your criteria we could equally claim that theft doesn't exist because it's illegal.
On a mortgage one makes a monthly payment:
the payment pays the month's interest based on the 'principal' outstanding at the beginning of the month
and then what's left, pays off some of the principal, hence reducing the principal owed.
This NOT front loading by any sensible standard.0 -
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Nope not bogged down by the legalities. My point is
Your description of Front Loaded Interest is spot on
Your claim that ""Front-loading of interest is actually more common that we might think. We find it in personal loans, car finance, mortgages and across the whole finance sectors" is incorrect if you mean they are front loaded as you yourself describe it
There are lots of claims in the forums that "My loan was Front Loaded" but what they are really saying is I thought interest was evenly spread but when I asked for an early settlement quote halfway through the loan my interest rebate is much less than half the total interest payable
So you claim that front-loading of interest doesn't exist.
No, in posts identified as being front-loaded they claim that when they attempted early settlement the interest had been paid but the principle was still intact. That in itself is not serious if an interest rebate is duly given but that is not always the case.0 -
So you claim that front-loading of interest doesn't exist.
No, in posts identified as being front-loaded they claim that when they attempted early settlement the interest had been paid but the principle was still intact. That in itself is not serious if an interest rebate is duly given but that is not always the case.
do you have a specific example so we can check the claim against the reality?0 -
do you have a specific example so we can check the claim against the reality?
It's not necessary. All you need to do is Google "front-loaded interest" without the quotes and you'll find loads of examples. But be careful to determine the country because some of them are more related to USA.0 -
It's not necessary. All you need to do is Google "front-loaded interest" without the quotes and you'll find loads of examples. But be careful to determine the country because some of them are more related to USA.
let's just restrict ourselves to the UK
do you have a single example of a loan (not defaulted) worth discussing?0
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