Early repayment of Natwest loan - save money?

itisgeorge

Hello,

I have a £4,000 loan with NatWest a few years ago (no date to hand), with a rate of 25.90% and a monthly repayment of £122.94. The interest seems to be charged monthly and the remaining loan balance is £3,325.60. Does this monthly interest all get added when you pay in a lump sum regardless?

I'm looking to potentially reduce this debt by early repayment by taking out a seperate low interest loan from Zopa for instance. I'm a bit confused if repaying early actually saves money, as the last early settlement figure I requested was higher than the balance shown on statements.

Will I actually be paying more than the balance shown on the statements if I continue to pay monthly?

I also understand that you incur a early settlement fee that I can avoid by not completely paying in full and leaving a months payment remaining to be collected normally.

Appreciate any help.

Cheers

[Deleted User]

The earlier you pay, the more interest you save, as interest is calculated daily and added monthly.

itisgeorge

perfect! So does the balance shown on say, online banking, include the interest? If not, does that mean the balance would technically increase if I continue paying monthly to include the interest?

Thank you!

StokieBecks

The balance shown does not include interest usually . The settlement amount will always be higher than the remaining shown on a statement

Request a settlement figure. That is the only way to get and up to date amount you need to pay to close the account.

However I would not be considering swapping one debt for another. You are not guaranteed you will get a low rate loan. How many months left of your existing loan? Is that your only debt?