Over payments HSBC Personal loan

bhzmac1

Firstly my partner has a Halifax personal loan and each time she makes an overpayment she get a letter confirming the amount of interest saved and how much the term has been reduced by.

Her online Halifax account shows the amount drawn down, the interest is added monthly, which alters with each overpayment made, along with the payments she makes to the account.

I have a personal loan with HSBC originally for £7000 over 60 Months @ 3.7APR, I have made £3000 in overpayments and wanted to check how this has affected the term and interest. My online statement shows the loan drawn down including the total interest to be paid over the term £7753.50 plus the regular payments and over payments being deducted from the figure. The account now shows the reduction in term but gives no indication of recalculation of interest saved.

I am assuming the overpayments will have an impact on interest charged, but now after speaking with HSBC I am confused...I assumed that maybe this would be reflected in a annual statement.

First call to HSBC i was told that no interest credit would be due unless the amount was paid off early, overpayment would only reduce the term - but surely reducing the term is paying off the loan early...gave up

Second Call to HSBC was told that interest would be refunded within 10 days of the loan being paid off, I asked them if they could tell me what amount of interest the overpayments had saved me so far....No but I was told my rate was now showing as 2.01%??? Gave up again.

Are my overpayments reducing the interest I am paying ? If so how can I get this information. Halifax seem to give you the information without asking for it HSBC don't have a clue what I am asking for....

lee111s

I have a loan with First Direct who are a sister company of HSBC so I'd imagine their policies are the same/similar.


With my FD loan, when overpaying I need to clear the loan total (including interest owed on the original balance) and will then be refunded the amount of interest I've saved by paying off the loan early.


So I borrowed £11500, total amount payable over 5 years was something like £12600. I need to pay £12600 back, which I'm on course to do by August 2017, meaning I've only had the loan for about 22 months. I should then get a refund of about £500 for the interest saved by repaying the loan early.


I assume you're aware that your payments are made up a lot more of the interest at the start of the loan then they do in the latter stages.

bhzmac1

Where did you get this information from? I am getting the general gist that I will be refunded interest when the loan is complete, but I just want an indication of how much that will be based on the overpayments made so far.

lee111s

I got this from the lending team within First Direct as I knew I'd be paying the loan off early so had a few questions surrounding it.


The amount you'll be refunded depends on when you clear the loan so they won't be able to tell you how much it'll be until it's paid off.


What you can do though is find a loan calculator that shows how much capital and interest will be paid off each month depending your term and loan amount. You can then add up the interest portions for the months after you'll have cleared the loan. As I mentioned above, the amount of interest you pay in pounds reduces as the term goes on. On the first payment you may pay £30 in interest, whereas the last payment may be less than £1 in interest.


So I added up all the interest payments from month 25 to 60 to get the rough amount I will have saved and therefor have refunded to me.

bhzmac1

Thanks very useful...Why HSBC could not just confirm this clearly in the first place. I will call again and ask again for them to confirm what happens at the end of the term regarding interest owed.