Loan Repayment Charge

Cleagarr

Hi,

I'm taking a loan of £25,000 with Sainsbury's at 5.8% to improve my house for sale and am taking a two month payment holiday. However, I have a buyer waiting and within 6 months I expect to be able to pay the loan off. Sainsbury's literature says if I repay in full I will pay 58 days interest - how can I work out how much this is?

I also have an offer from the AA at 5.9% (no payment holiday) that I can repay with no fees. It seems to me that although there is more cost up front (two months payments) this is a better deal for me in my situation, however as I don't know what 58 days interest will equal I am unsure.

Any advice gratefully received!

Regards,

Nearlyold

Have a look at this loan calculator http://www.theguardian.com/money/loan-repayment-calculator-interest-rates put your loan details in and it will show you each month's interest charge. So if you paid off the loan after 6 payments you would pay the interest due in month 7 x 2 as an early repayment charge. It can be possible to avoid the early repayment charge by making a large overpayment leaving about 1 months payment to go, to be collected in the normal way by DD but you need to check the loan T&Cs to see if that would work.

glentoran99

Cleagarr wrote: »

Hi,

I'm taking a loan of £25,000 with Sainsbury's at 5.8% to improve my house for sale and am taking a two month payment holiday. However, I have a buyer waiting and within 6 months I expect to be able to pay the loan off. Sainsbury's literature says if I repay in full I will pay 58 days interest - how can I work out how much this is?

I also have an offer from the AA at 5.9% (no payment holiday) that I can repay with no fees. It seems to me that although there is more cost up front (two months payments) this is a better deal for me in my situation, however as I don't know what 58 days interest will equal I am unsure.

Any advice gratefully received!

Regards,

Take a step back here, why would you be spending £25000 on a house you are selling, its highly unlikely you'll get that back in the sale price, You say you have a buyer waiting? Why the wait?

Gaz83

Very roughly, 5.8% interest works out to be 0.0158904109589% per day, which is 0.922% for 58 days (allowing for rounding).

0.922% of £25,000 is £230.41.