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Post Office Loan - Early Repayment

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Comments

  • Caz3121
    Caz3121 Posts: 15,826 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    it is a fixed APR....your interest rate will be 3.2% of the outstanding amount for the duration of the loan
    initially the balance owed will be higher and the interest will be calculated on that....as you reduce the loan the interest will decrease.
    Monthly payments remain the same throughout but the split between capital and interest changes...as you go through the life of the loan your monthly payment will include more capital and less interest
  • Caz3121 wrote: »
    it is a fixed APR....your interest rate will be 3.2% of the outstanding amount for the duration of the loan
    initially the balance owed will be higher and the interest will be calculated on that....as you reduce the loan the interest will decrease.
    Monthly payments remain the same throughout but the split between capital and interest changes...as you go through the life of the loan your monthly payment will include more capital and less interest

    So at 3.2% fixed, for the example I gave... 10K Loan... over say 4 years

    total repayable 10.5K sounds about right? Loans aren't so bad then?
  • Clive_Woody
    Clive_Woody Posts: 5,936 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Adams18 wrote: »
    So at 3.2% fixed, for the example I gave... 10K Loan... over say 4 years

    total repayable 10.5K sounds about right? Loans aren't so bad then?
    Loan rates are historically low at the moment (assuming you are offered the representative APR). Loans aren't bad if you can afford the repayments and you don't want to (or can't) take the time to save up. Saving up will always be better as you will be receiving interest on your savings and not giving away your money.

    https://www.moneysupermarket.com/loans/calculator/
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
  • Caz3121
    Caz3121 Posts: 15,826 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Adams18 wrote: »
    So at 3.2% fixed, for the example I gave... 10K Loan... over say 4 years

    total repayable 10.5K sounds about right? Loans aren't so bad then?

    you originally quoted 3 years which would be <£500 interest
    interest will be more if you spread the loan over longer terms
    over 4 years it shows £657.18 interest
    over 5 years £822.33
    7 years £1,157.57 etc
  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Teadog wrote: »
    Thanks for the reply, I'm just wondering how you got to that amount?

    I could be working this out completely wrong, but the total amount of the loan including interest would be £4904 to pay over 24 months. If I take the £904 and divide it by 730 days (24 months) that gives me £1.24 as a daily interest rate. If I then multiply this by the 58 days they mentioned that would bring me to roughly £72.00.

    Again, apologies if this is a completely incorrect way of calculating this.

    Yes you are wrong.

    £4000 X 22.4% = £896 / 12 = £74.67 per month or £2.45 per day x 58 = £142.10 or there abouts.

    Just pay back the settlement figure and dont take out a loan with this interest rate again.
  • seb345
    seb345 Posts: 15 Forumite
    10 Posts First Anniversary
    yeah loans in general never really tell you how much true interest you will end up paying
  • Stop taking out loans from the bloke down the pub.  

    Use a regulated lender and they'll always tell you the interest you'll pay.
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