Post Office Loan - Early Repayment

Caz3121

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

[Deleted User]

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

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/

Caz3121

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

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

yeah loans in general never really tell you how much true interest you will end up paying

[Deleted User]

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.