Sainsburies loan £7500

LinAglon

Hi. I am confused about my payments.

I took £7500 for 5 years, they gave me for 9%

They said I will pay monthly £157.

157*12*5= £9420-7500= 1920 - I thought this is going to be my interest, if it's not - so what is it then, if they want me to pay £53 more every month.
Every month now I see they add £53 or £54 or £55 of interest and it's not included into direct debit payment. At the end of 5 years on my loan account will be £3180 more to pay.
53*12*5= £3180
I don't understand what is going on.
3180+1920=5100 - is that how much is interest in their bank for 5 years? almost more than half from £7500!
Why they said I will pay monthly fixed sum of £157 and then add more money into it, without option to pay more. I just don't understand why they can't add this interest then to my direct debit and why it's different every month, if they told me I will pay fixed sum.
What I need to do? I think it's just crazy, that I am going to pay almost half more then I expected.
Can you explain?

[Deleted User]

The interest is calculated daily and added monthly. Your payments will equal the capital and interest charged.

Nothing to worry about, and nothing crazy.

LinAglon

I think you don't undertsand - this interest stays on my account. I don't pay for it, because it's not included in monthly payment of £157, which is already includes interest or I don't know what they included.

This interest at the end of 5 years will be almost £4000 if I will not pay every month.

And why it's not crazy. if I will pay back almost double 4000+1920=6920+7500=£14420

Can you explain better please what is going on. If you know answer of course and want to explain, of course.

jpsartre

LinAglon wrote: »

Every month now I see they add £53 or £54 or £55 of interest and it's not included into direct debit payment. At the end of 5 years on my loan account will be £3180 more to pay.
53*12*5= £3180

Your calculations are off. They won't be adding £53 in interest every month since the money you owe will decrease over time (and hence the interest you pay will be lower). I'm not sure what you're confused about to be honest, of course there will be interest added to your debt every month, otherwise you'd end up paying back exactly what you borrowed and nothing more.

enthusiasticsaver

The loan is £7500 and that is the principal and capital amount of the loan. The interest will be worked out on a daily basis and added to the loan monthly. That will reduce over the 5 year period as the loan gets paid down.

The total amount of interest earned will be £1920 over the 5 years. Your monthly amount will be £157 and will included capital repayment and the interest but as the loan goes on the interest will reduce. You will only have to pay £157 each month. For example in month 1 the monthly interest will be around £56 so your £157 will cover the interest and reduce the capital by £101. Month 2 the monthly interest will be around £55 so the capital will reduce by £102 and so on until the 5 years is up.

[Deleted User]

LinAglon wrote: »

Can you explain better please what is going on. If you know answer of course and want to explain, of course.

I was happy to explain in my first reply. The facts have remained the same.

Your payments cover capital and interest over the term.

Your interest is calculated daily and added monthly.

It's still not crazy.

LinAglon

Edited: so you are saying that at the end of 5 years all interests of £53 and more will disapear? Is that what you are saying? I am not going to pay more for £4000 to the bank? Is that what you are saying?


I asked so many questions, and you just don't want or just don't know how to explain them to me.

I asked:
1) what is that £1920 (for 5 years) whish is included in monthly payments of £157.
2) why they don't let me pay £53 of interest together with monthly payment of £157?
In my account they do like that: 157-53=104 - that's how much I pay on the paper. £53 are still on my account. They are not going away anywhere, and every month I am getting new £53 or 54. At the end of 5 years it's gonna be £4000 (almost), what I didn't pay - IT WILL BE ON MY ACCOUNT. They just don't let me pay this every month. DO YOU UNDERSTAND NOW.
3). I asked and said that it's crazy to pay almost doubled sum back. How is that possible, if they said it's gonna be just 9%.

CAN SOMEONE TO EXPLAIN IT TO ME PLEASE!!!!!!!!!!!!

[Deleted User]

1) Because that's the interest you need to pay back
2) They do - it is paid within your monthly payments, but spread evenly over the term
3) It's not crazy because it's not true. It's something you've made up because you don't understand the figures and won't read people's replies.

enthusiasticsaver

I am sorry but you are not hearing explanations.

The interest will not be £53 every month for the whole 5 years. As the loan balance reduces so will the monthly interest amounts and at the end of the 5 years it will be practically nothing each month. The total interest paid over the whole 5 years is £1920. The interest rate is 9% but the loan reduces each month so the monthly interest also reduces.


Your monthly payment is £157 and at the end of 5 years your loan will be 0. This is the way every loan works. Have you not taken one out before?

DrEskimo

LinAglon wrote: »

Edited: so you are saying that at the end of 5 years all interests of £53 and more will disapear? Is that what you are saying? I am not going to pay more for £4000 to the bank? Is that what you are saying?


I asked so many questions, and you just don't want or just don't know how to explain them to me.

I asked:
1) what is that £1920 (for 5 years) whish is included in monthly payments of £157.
2) why they don't let me pay £53 of interest together with monthly payment of £157?
In my account they do like that: 157-53=104 - that's how much I pay on the paper. £53 are still on my account. They are not going away anywhere, and every month I am getting new £53 or 54. At the end of 5 years it's gonna be £4000 (almost), what I didn't pay - IT WILL BE ON MY ACCOUNT. They just don't let me pay this every month. DO YOU UNDERSTAND NOW.
3). I asked and said that it's crazy to pay almost doubled sum back. How is that possible, if they said it's gonna be just 9%.

CAN SOMEONE TO EXPLAIN IT TO ME PLEASE!!!!!!!!!!!!

I'll have a go, but please don't resort to shouting :beer:

Your payment of £157 each month will include both capital repayments (paying back the £7,500 you borrowed) and interest. It's all included in that monthly payment. Nothing gets added on top.

As you pay down the capital each month, the proportion of your monthly payment that goes towards interest decreases, whilst the proportion that goes towards the capital increases. You can show this using an online calculator:

https://www.themoneycalculator.com/loans/calculators/loan-overpayment-calculator/#!/dealfinder/loans/

(although useful, I found it's not that accurate with regards to precise figures with interest...)

You can see that if you add the Capital and the Interest each month, you always equal your fixed monthly payment. You can also see how the Capital increases slightly each month, whilst the Interest decreases slightly each month.

Month Payment Capital Interest Amount owed
Month 1 | 30/03/2019 £155.69 £99.44 £56.25 £7,400.56
Month 2 | 30/04/2019 £155.69 £100.19 £55.50 £7,300.37
Month 3 | 30/05/2019 £155.69 £100.94 £54.75 £7,199.43
Month 4 | 30/06/2019 £155.69 £101.69 £54.00 £7,097.74
Month 5 | 30/07/2019 £155.69 £102.46 £53.23 £6,995.28
Month 6 | 30/08/2019 £155.69 £103.23 £52.46 £6,892.05


...etc....

Hope that clears it up for you :money:

LinAglon

no, it's my first big loan. ok then, now I understand that I don't have to worry about these interests on my account, because ....I really don't understand what was the point to show me them, if they are not affecting my monthly payment and final balance at the end of 5 years.

Thanks.