Loan Assistance

jc0r

Hi all,

just looking for some advice. I've never taken out a loan before so excuse my lack of knowledge. But i am looking to borrow £25000 for a new car. With my existing bank they are offering an APR of 10.2% if i take the loan over 5 years, with monthly payments of £528.13. The total amount repayable is £31,687.90. This doesn't make any sense to me. None of my calculations get anywhere close to the total amount payable. Can anyone explain how they get to that figure?

Also, the reason i am trying to figure this out is because i do not plan to have the loan for the full duration. All things been well i plan to pay the loan off in the next 12 months. I understand there are early settlement fees, to which my bank said it would be 1 months interest up to £100. I'm under the impression if i pay off early, i save on all the interest? However, if i was to pay off early, do i have to pay the total amount payable based over the full duration of the loan? This can't be right though otherwise why would anyone pay off early? I thought it was to save on paying interest?

Basically, i wanna borrow the money with the smallest possible monthly payments in the mean time and pay it in full after say 12 months. This means i only pay interest on the 12 months i actually had the loan right, drastically reducing the total amount payable?

Many thanks

[Deleted User]

The monthly payment times the term gives the total amount payable.

If you pay it off early, you will save on future interest.

Gaz83

There are twelve months in a year. This means that in five years, there are (5x12) 60 months.

If you're paying £528.13 a month, then multiplying this by 60 you get £31,687.80.

DCFC79

Thats an eye watering amount for a car, half of that amount is perfectly acceptable to spend on a car.

Ebe_Scrooge

Aside from the good advice posted above ( i.e. that's a heck of a lot to spend on a car ), then what about this ? Buy an old banger with a year's MOT for a couple of hundred quid. Keep it for a year. Meantime, save up the £25k ( which you can easily do, given that you say you can pay off the loan in 12 months ). After a year, use your savings to buy the new car for cash - no interest at all to pay. Sell the old banger - you may well get close to what you paid for it. Even if you have to scrap it, it's nothing lost. Everyone's a winner.

Richey_

frank_Ray wrote: »

When faced with situation the best alternative is to use a private money lender that has a flexible payback options that works best for you. I can recommend to a private lender who will help you.

New poster , posts same message on two different loan threads.

Steer well clear would be my advice from a loan shark !!!