Loan Amortisation statement

Arul

jonesMUFCforever wrote: »

Is it wise to borrow at all if you do not understand the product - you borrow you pay interest - if you overpay then you pay less interest overall - why crucify yourself over all this?
Live life to the full.

Next time save up it will save yourself a packet.

I have taken loans previously and have settled them as you say, but this is the first time with HSBC where the system seems to vary..as you say if I overpay I should pay less interest, after I have made an overpayment, I would like to understand how much less should I pay for which the bank denies an answer...is the bank not liable to answer what's the benefit of making an overpayment? So far they are clearly discouraging an overpayment in my case !!!

Arul

Nearlyold wrote: »

*If you make an overpayment it will either reduce the term or reduce the monthly payment, either way from the point onwards when you make your overpayment you will save interest because you owe less. There is no magic mathematical point at which its better to make an overpayment, the earlier you make an overpayment the more interest you will save, as I said before - simples.


*This is on the assumption you have taken a consumer loan governed by the European Consumer Credit Directive

The loan. Is with the HSBC ,I was also under the assumption that if I make an early overpayment I should save more on interest but the HSBC bank doesn't come forward to disclose how much tenure or how much amount is reduced rather they keep saying I should pay the loan amount in full to be provided with such detail..

Nearlyold

It is a statuary requirement that any overpayment will save on interest. You can easily calculate the saving for yourself. Using the Amortisation table(s) you have found - Enter £1,000 as an amount borrowed, the interest rate of your loan, for the term of the loan use the period (x months) that would be remaining on your loan at the point where you want to make your overpayment - The table will show you the total interest payable - this is the amount of interest you will save based on paying £1,000 off your loan with X months to go. You can play about using different terms for x months and pro rata different overpayments using the base of £1000. The bank will probably charge 1 months interest on any overpayment

Xbigman

But you are asking them to tell you the split between capital and interest on your loan if you make the normal payments. That won't help you work out what an overpayment does. The best you can do is to use a calculator or write your own spreadsheet to work it out. That will be closer than anything else you might do. Or put another way, you don't actually want what you are asking for.

There is another big point to make. Loan calculations are often wrong. Or maybe I should say inaccurate. I have a flexible loan with Lloyds that I pay on the first of each month that I took out on the 18th June. Because the first payment only had 12 days interest deducted my balance is lower than I had worked out on a spreadsheet. The final loan payment in 4 years time would therefore be lower than the other 59 payments. Because Lloyds told me the monthly payments before asking me for the day of the month I wanted to pay the loan on, this was always going to be the case.
You need to use a spreadsheet and work all this out yourself and then track the monthly balance and compare to what you spreadsheet says.

Just a note to say that when I make an overpayment on a Lloyds loan they write to me to tell me how much interest I've saved.
That was incredibly useful in helping me prove my spreadsheet was pretty close to the right figures.


Darren

Arul

Nearlyold wrote: »

It is a statuary requirement that any overpayment will save on interest. You can easily calculate the saving for yourself. Using the Amortisation table(s) you have found - Enter £1,000 as an amount borrowed, the interest rate of your loan, for the term of the loan use the period (x months) that would be remaining on your loan at the point where you want to make your overpayment - The table will show you the total interest payable - this is the amount of interest you will save based on paying £1,000 off your loan with X months to go. You can play about using different terms for x months and pro rata different overpayments using the base of £1000. The bank will probably charge 1 months interest on any overpayment

Xbigman wrote: »

But you are asking them to tell you the split between capital and interest on your loan if you make the normal payments. That won't help you work out what an overpayment does. The best you can do is to use a calculator or write your own spreadsheet to work it out. That will be closer than anything else you might do. Or put another way, you don't actually want what you are asking for.

There is another big point to make. Loan calculations are often wrong. Or maybe I should say inaccurate. I have a flexible loan with Lloyds that I pay on the first of each month that I took out on the 18th June. Because the first payment only had 12 days interest deducted my balance is lower than I had worked out on a spreadsheet. The final loan payment in 4 years time would therefore be lower than the other 59 payments. Because Lloyds told me the monthly payments before asking me for the day of the month I wanted to pay the loan on, this was always going to be the case.
You need to use a spreadsheet and work all this out yourself and then track the monthly balance and compare to what you spreadsheet says.

Just a note to say that when I make an overpayment on a Lloyds loan they write to me to tell me how much interest I've saved.
That was incredibly useful in helping me prove my spreadsheet was pretty close to the right figures.


Darren

Currently my Loan statement from HSBC looks as follows for £15k loan for 5yrs period, the £100 overpayment highlighted in April has not made any difference to the outstanding which includes the interest , as you all say if I made an overpayment there should have been atleast a slight reduction in the balance for the £100 overpayment contribution , but in this case I do not see any benefit of making an overpayment, this is when I wanted to understand the amortisation split, any advise would be of help for me.

Date|| Type || Description ||Paid Out| Paid in |Balance (£)
15 Jun|| CR|| Loan Repayment || ||314.81 || 17529.36 D
14 May|| CR|| Loan Repayment || ||314.81|| 17844.17 D
18 Apr|| BP||Personal Loan || ||100 ||18158.98 D
14 Apr|| CR|| Loan Repayment || ||314.81|| 18258.98 D
16 Mar|| CR|| Loan Repayment|| ||314.82|| 18573.79 D
14 Feb|| DR || Loan Drawdown || 18888.61||

Nearlyold

That does not look like a full annual statement but simply a summary of the total amounts still to pay, where did you get it from? Your annual statement should take into account fully any overpayments.

Arul

Nearlyold wrote: »

That does not look like a full annual statement but simply a summary of the total amounts still to pay, where did you get it from? Your annual statement should take into account fully any overpayments.

I got this statement from my online account, and thats the reason I was behind the HSBC customer care to get the amortisation statment or a revision statement projecting my revised balance , but the response I am receiving is "the resvised statement will be generated only during the closure of loan and they will not be able generate one now"... :-(

Nearlyold

I don't think your online loan account "statement" has any amortisation calculations running behind it, its just taking the original loan plus the total interest payable and deducting each payment you make, I'm fairly sure your official annual statement will give you the full picture. Incidentally you might be expecting a bit too much of HSBC to provide you with a personalised recalculation of the loan every time you pay an extra £100 - the average saving in interest will be no more than 43p per month.

jonesMUFCforever

Arul wrote: »

I have taken loans previously and have settled them as you say, but this is the first time with HSBC where the system seems to vary..as you say if I overpay I should pay less interest, after I have made an overpayment, I would like to understand how much less should I pay for which the bank denies an answer...is the bank not liable to answer what's the benefit of making an overpayment? So far they are clearly discouraging an overpayment in my case !!!

Then go back to the banks who lent to you previously.

Arul

Nearlyold wrote: »

I don't think your online loan account "statement" has any amortisation calculations running behind it, its just taking the original loan plus the total interest payable and deducting each payment you make, I'm fairly sure your official annual statement will give you the full picture. Incidentally you might be expecting a bit too much of HSBC to provide you with a personalised recalculation of the loan every time you pay an extra £100 - the average saving in interest will be no more than 43p per month.

As you see the Loan itself was drawn on Feb 2015 only, the £100 overpayment I made on April is to understand the how does the repayment works with HSBC as this is the first time I am with them. As others in the forum who have mentioned where in they are provided with the revised Balance when they make overpayment, HSBC doesn't seems to be providing a revised Balance.Be it £100 overpayment or £1000 overpayment shouldn't the Bank be producing the document we request for , if need be they can go ahead and charge for the request , but totaly denying any form of document at all seems to be frustrating to handle, as I mentioned in my previous post I was not expecting a big reduction , all I was expecting was a slight reduction of approx £60 in the overall statement but even the slight reduction hasn't happened which is the disappointment. Should I ask for an officail annual statment other than the one they display online? why would HSBC Bank show a different statement online and provide different statement on request ?