Best way to short term borrow and APR

moreno5uk

Hi guys,

I am in need of a short term loan as I have seen a car I would like but my funds are tied up for a few months. In order to not lose the car, I was looking at borrowing the money and then in 2-3 months paying it back.

I have found that zopa offer a loan with no early repayment fee and a 3.1 APR.

I assume if I take out a loan for £22k over 5 years I will pay the loan repayment amount each month of £396.25 until I decide to terminate and just pay off the balance?

What I am unsure about is how the balance is calculated. Do I instantly owe my original amount less the number of months I have already paid plus any interest remaining for that month? Or is the full interest added to the loan at the start so that my balance includes all interest?

Does this make sense?

Thanks in advance

System

Just wait until you have the funds freed up. With the exception of classic and supercars no car is so unique that you won't be able to find a comparable example in a few months when you have the money.

Sncjw

How much do you earn and do you have any other debts

moreno5uk

@tarambor unfortunately it is that unique so cannot wait til funds are freed up.

@sncjw no other debts other than a mortgage and salary is not a problem.

Nebulous2

Not sure about zopa. Lenders can do either. Some quote the amount of the loan and the interest ticks up until you make a payment, when it drops,then slowly ticks up again and repeat.

Others add all the interest to the balance then reduce the total by each payment.

Either way it is simply a matter of recording and you will pay the same amount. One way you repay what your balance says, the other way you get a settlement figure from the company which is less than the balance because they deduct the interest not due because you haven't gone to term.

Sncjw

How much Is your salary? it will guide you if you would actually get the loan or not because it is a big loan.

moreno5uk

Sncjw wrote: »

How much Is your salary? it will guide you if you would actually get the loan or not because it is a big loan.

Understood, but not something I am going to discuss in the public domain. My salary will not be a problem.

zagubov

venison wrote: »

Have you tried your bank?

Good call. Your bank might know you better and might be more positive.

Not sure if Zopa is the way to go. Look around.

foxy-stoat

moreno5uk wrote: »

I have found that zopa offer a loan with no early repayment fee and a 3.1 APR.

I assume if I take out a loan for £22k over 5 years I will pay the loan repayment amount each month of £396.25 until I decide to terminate and just pay off the balance?

What I am unsure about is how the balance is calculated. Do I instantly owe my original amount less the number of months I have already paid plus any interest remaining for that month? Or is the full interest added to the loan at the start so that my balance includes all interest?

Does this make sense?

Thanks in advance

1. You have found a loan for 3.1% - have you actually been approved for it though and been offered the 3.1% rate?

2. Yes you make the contracted monthly repayments once you take out the loan - not sure how you think it was going to work.

3. You do not need to worry about the amount the settlement figure is, when you are ready to pay it off you call the lender and ask for the settlement figure, you can do this any day in the month but it would probably be best a a few days after the next monthly payment is due.

You dont get charged all the interest, but they charge you upto 2 months interest when you settle - and no you dont deduct all the money you have already paid off, as some of that will be capital and some will be interest.

poppasmurf_bewdley

moreno5uk wrote: »

Understood, but not something I am going to discuss in the public domain. My salary will not be a problem.

Ok, so your salary is not a problem and will cover your loan.

How much have you saved up and in the bank? I ask this as it is usually a way of indeed finding if your salary is enough to cover loan repayments.

Plenty saved up and no credit card debt inevitably means you're earning enough, and you should go ahead.

Nothing in the kitty means you're living right up to the edge and should be cutting down, not looking to spend more.

So which one are you?