Am I being stupid?

SYD

Evening all,

I've been having a think about my finances lately.

About a year ago I took out a 10k loan to consolidate credit card debt.

The deal i got was for 54 months at 12.9% apr, best I could get at the time.

Tell me if I'm being stupid or not but what would the interest be on this loan over the period?

Something doesn't add up in my head and just looking for some clarity.

Full breakdown of loan is:

10k for 54 months at 12.9%
Monthly repayments of £241.53
Total repayable: £13,042.62

Any advise appreciated, even if it's just telling me to stop being stupid and it does make sense.

SMCG

I can't answer your question. My question to myself would be, if I never got the loan what sort of situation would I be in now.

cue someone coming along saying welcome to the forum and .........

boo_star

Loan calculators say £3233.92 in interest but you're paying slightly more per month than the loan calculators are basing this off so that probably explains why your total interest due is slightly less than this.

anto164

£3042 is the interest. Dont forget they charge interest from day 1 and will be calculated daily on the remaining balance.

enthusiasticsaver

Consolidation is rarely a good idea so while I would not say you were stupid it was not the best way of dealing with debt. However what is done is done so you are best making a plan to deal with the here and now. Do you have other debt? Usually that is the problem with consolidation is that the loan is taken out to move existing debt then people don't change spending habits and carry on overspending so very soon they have a consolidation loan plus more credit card debt.

The longer the repayment period for loans with relatively high interest rates is the more expensive the loan. So repaying that debt of £10000 will cost you more than £13000.

Have you learnt from it? Are you now living within your income? I would urge you to start overpaying the loan to get rid of it quicker. 4.6 years is a lot of time to repay credit card debt.

enthusiasticsaver

Also you won't be able to calculate the interest in your head. Obviously the rate is 12.9% per year over a period of 4 years and 6 months but loans are usually calculated on a daily basis so each month the balance will reduce when you make your payment of £241.53 and then increase when the interest is added on unless the loan is front loaded(all the interest goes on at the beginning). Consequently the interest payments are higher at the beginning of the loan when the capital figure is highest and lower near the end of the loan as you eventually clear it. Making extra repayments will reduce the interest you pay and get rid of it quicker unless there are early repayment penalties.

TrickyDicky101

boo_star wrote: »

Loan calculators say £3233.92 in interest but you're paying slightly more per month than the loan calculators are basing this off so that probably explains why your total interest due is slightly less than this.

You need to de-compound the 12.9% APR into the annualised monthly equivalent which is 12.195%. Then the loan calculator should agree to the OP's figures.

DCFC79

Have you resolved the cause for the spending that led to consolidating ?


Are the cards now closed and cut up ?