Barclays Partner Finance Advice please.

Shakin_Steve

davieg11 wrote: »

Another way to look at it. £10k over 4 years at 13.6% interest = £271 per month , £3020 in interest = £13020 to pay back.
£10k over 1 year at 13.6% = £895 per month , £751 in interest = £10,751 to pay back.
So after paying £271 for 11 months = £2981, WHY can't the settlement figure be £10,751 - £2981 = £7770 instead of around £10,000.
The bank would still have made its £751 profit in 1 year

Because 13.6% will be the rate they offer over 48 months. A loan offered over 12 months will have a much higher APR.

Nearlyold

davieg11 wrote: »

Yeah, all loans are a big con. I had 8 months left on my loan and phoned for a settlement figure and it was like £35 cheaper (all in) than continuing to pay it monthly. I asked why can this be? , and was told most of early payments were interest!!! So I can see where you friend is coming from by saying you can save all that interest by paying it off early but who knows how it works??? I learned my lesson and will stay clear of bank loans.

Sorry davieg11 but it's clear you don't understand how loans work. Interest is charged by the lender on the monthly or daily balance outstanding, at the start of the loan you obviously owe more than at the end of the loan so naturally pay more interest at the beginning of the loan than you do at the end. In your example above if you only had 8 months to go on the loan then your balance would be relatively low and therefore not attracting much interest hence only a small saving in paying it off early

ALL loans whether bank loans, mortgages, credit cards, hire purchase, conditional sale, fixed sum agreements etc. work in the same way so if you think its a con you'd better not borrow money from anyone. If you google Guardian Loan Calculator and put some figures in, you can see how on a monthly basis the amount outstanding reduces as does the interest charged each month.

davieg11

At least with a credit card you can see what you owe. Pay it off then the next month clear the trailing interest.

Nearlyold

davieg11 wrote: »

At least with a credit card you can see what you owe. Pay it off then the next month clear the trailing interest.

If you use one of the loan calculators, like the Guardian one I referred to and put your loan figures in you'll easily be able to track the amount you owe (within a few pounds) on a monthly basis you just need to remember any settlement figure will usually have an additional two months interest added.