Nationwide - Early Repayment Of Loans

Rafter

Ben,

Rule of 78 is not allowed any more and banks must use the actuarial method as outlined by cafster. Although you do need to know whether interest is calculated daily or monthly and also what rounding errors there are.

Certainly banks are notorious for rounding down and using every trick in the book so a 6.9% loan is often 6.949% rounded down to 1 decimal place.

Going back to the original poster. It looks like nationwide are trying to be 'helpful' and tell you what your final payment will be. So the numbers they are quoting are your normal monthly payment plus the penalty interest.

I'm sure if you call them up they will provide a breakdown, but as others have says it depends how far through the loan you are, when you want the loan to end, when you made a final payment etc etc.

For next time, worth trying the Northern Rock if you want a loan you expect to pay off earlier - they are one of the few that don't charge penalties.

Small loans (<£2000) aren't very profitable for the banks though. Because the cost of processing lots of small payments and doing the credit search and paperwork to set up the loan eats into a big chunk of interest. So expect to pay a higher rate of interest.

R.

[Deleted User]

If they told you "2 months interest" and are trying to charge more than that, you should complain...