Natwest loan, interest?

Sophie1508

Hello, can anyone advise?

Took out a 3k loan at 29.9%apr in April, over 2 years (with the intention of paying back much sooner)
Repayments work out at 157.34, total being 3776.16

So, money went in the account, first payment went out. Then an addition interest charge of 53.51?

Second months payment went out, followed by an additional interest charge of 59.03?

I then payed off £1200, and received an interest charge of £40.70 (I was aware about this one, I know they charge for part payments)

Third months payment went out, followed by an interest charge of £52.20!

Can anyone shed some light on these £50-odd payments? After paying off £1200 surely it shouldn't still be £50 additional a month? If I'm paying that much interest a month it's going to make my loan closer to £5000, not the original £3776? It's also not going to be paid back over the original term time if a third of the payment is being added back on a month!

Should also point out that when I wished to pay back £1000, natwest emailed me to say the monthly repayment (157.53) would stay the same, but it would be paid back 9 months early, reducing the total to 3360ish. So where do these £50 a month additional interest charges come in to play?
Not sure if I'm being completely naive, but I was under the illusion that the interest was charged in the monthly £157 payment?

Thanks

[Deleted User]

Sounds as if they are just displaying the monthly interest as it is added. It will decline each month and is covered by your monthly payment.

tiredoflife

As zx81 said, they display the interest. My loan was £280 a month and the payments were broken down into two parts to total the £280, so £200 and the £80 interest. It goes down each month, it's not extra interest.

PeacefulWaters

The different amounts of interest are linked to the number of days in the accounting period.

Sophie1508

I'm still a bit confused, surely after paying off half of the loan the "insterest" should have dropped to less than the first months interest? - it's still the same £50ish?
The £50ish goes back on to the loan balance, is that supposed to happen?
For example, first month showed
-3000
-first payment 157.34, balance 2842.66
Following day it showed + 53.51, and the balance at £2896.17 is that right??

Thanks

[Deleted User]

Yes, that's right. The opening balance doesn't include the interest, so is then added on each month. Otherwise you would simply be paying off the capital (3k).

You'll need to check the daily balance around when you made the large overpayment to see how that was calculated. They may also have charged an ERC on that overpayment - what does the contract say?

foxy-stoat

I would wait until next month, as they are entitled to charge upto 2 months interest on early repayments amounts.

Sophie1508

Oh of course! That makes sense! Yeah there was an early repayment charge on the large amount, plus interest. So will the interest go down as I continue to pay monthly? Is the interest calculated on the balance of the loan rather than what it started at?

foxy-stoat

Sophie1508 wrote: »

Oh of course! That makes sense! Yeah there was an early repayment charge on the large amount, plus interest. So will the interest go down as I continue to pay monthly? Is the interest calculated on the balance of the loan rather than what it started at?

Yes, its calculated on the balance.

I have a Natwest loan and as I bank online I can see my monthly payments and interest charges. The charges are worked out on a daily basis, mine go up and down all the time but I assume that the total interest charged will not be more than what is stated on the credit agreement so I dont worry too much about a few pounds difference.