We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
How Prepayments works?
mukesh.patel
Posts: 5 Forumite
in Loans
I am new to Personal Loan system in UK, I have taken Loan of 20,000 in Dec, 2015 for 2 year loan term. Till date I have Paid 10,000 (standard monthly payment) and now I want to prepayment some amount (4000) that does not settled the loan.
If I pay 4000 this month Sep 2016 does it will affect upcomming standad monthly payment?
Does penultimate month will shorter then it has to be Dec 2016?
If I pay 4000 this month Sep 2016 does it will affect upcomming standad monthly payment?
Does penultimate month will shorter then it has to be Dec 2016?
0
Comments
-
No.mukesh.patel wrote: »
If I pay 4000 this month Sep 2016 does it will affect upcomming standad monthly payment?
I don't know what that means.mukesh.patel wrote: »
Does penultimate month will shorter then it has to be Dec 2016?0 -
If you have paid £10k so far, some of which will be interest then no, paying another £4k will not settle a £20k loan. You'd really need to read the T&C of your loan but generally speaking making overpayments reduces the term of your loan (and the amount of interest paid) but it doesn't reduce the monthly payment amount.0
-
Second to Last month0
-
So at the end of Loan term I will get Re-fund for extra paid prepayment?0
-
mukesh.patel wrote: »Second to Last month
Thanks for that.
Yes, I know what penultimate means. I just don't know what "Does penultimate month will shorter then it has to be Dec 2016?"
I understand all of the individual words, just not in that order.0 -
mukesh.patel wrote: »So at the end of Loan term I will get Re-fund for extra paid prepayment?
No. You loan term will simply end sooner. There would be a small refund if your normal monthly payment is greater than the outstanding balance at that time.0 -
Let's say, Dec 16 is last month of loan, So Nov 16 will be penultimate month. On prepayment of 4000 does it will cause Loan term shorter (so penultimate month)?0
-
you still owe £10k plus interest, your £4k overpayment isn't going to get you anywhere near ending dec 2016. An overpayment will either reduce the term of the loan or reduce the monthly payments to the end of the loan (dec 2017).0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 353.5K Banking & Borrowing
- 254.1K Reduce Debt & Boost Income
- 455K Spending & Discounts
- 246.6K Work, Benefits & Business
- 602.9K Mortgages, Homes & Bills
- 178.1K Life & Family
- 260.6K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards