doesnt make sense

neelxxshb

I took out a loan of 25k with Barclays for 5 years with an interest of 6.17%. I been paying £485 a month for past 3 years and got 2 years to go and my outstanding balance is £11360 now. I called Barclays with an early settlement figure and they told me it would be £11420 (so £60 for early settlement fee) but when I questioned the person on the phone that my outstanding balance of £11360 would include the interest for the next 2 years and if I settle early, would I get some interest back or shouldn't be settlement figure be lower? to this they replied 'NO' - They said that if I settle it now or settle over the next 2 years, I still have to pay full interest on the amount! Does this make sense to anyone?
Thanks

Sncjw

It will likely be in the terms of the agreement. They would rather you pay the interest if the full term as that is what you had taken out

Caz3121

From the figures it looks like you have made 35 payments and have 25 remaining
After 35 payments, the amount still due on the loan balance would be £11,357.73
If you continued to pay the 25 monthly payments instead you would pay 25 x £485.30 = £12,132.50 so you save over £700 paying it early
note the interest part is lower the further into the term you get
In the first £485 payment, £128 would have gone on interest
on the 36th payment it will be £58 dropping month on month to £2.48 in the final month

Nearlyold

It is a legal requirement that all consumer loans rebate interest for early settlement. The figure Barclays gave you was the current outstanding amount (so obviously doesn't include any interest yet to be paid), its not the total amount yet to pay if you kept the loan running which would include future interest. You and the Barclays rep have just been talking at cross purposes.

neelxxshb

Sorry for late reply as been busy moving houses. Thanks for all your replies and I really appreciate it.