HELP - Maths help please!!

iamashoppingaddict

Hi guys,

Haven't been around recently but I am still money saving and I'm getting my debts down slowly but surely. I want to pay my loan off early. It doesn't allow overpayments so I will be putting money aside into my savings account. I can't work out the maths behind this though, it isn't one of my strong points (hence how I got into this mess in the first place!!) LOL.

Right well when I called the loan company up last month the loan stood at £4,750 (I have made a payment this month) and I pay £236.70 a month. The loan finishes offically in May 2009. I will be saving £150 a month (once xmas is over). How long will it take to pay it off with the normal payment of £236.70 and my savings of £150 a month. Or tell me how to work it out!!!!!!

Thank you all very muchly!
Mxx

Fortheloveofmoney

I worked mine out by mutiplying the amount i pay per month by the number of payments left. This gives the total outstanding loan (assuming that the interest rate is fixed). Then divide that amount by your normal payment plus £150 so in your case £386.7. This will give you the you total number of months left to repay the loan by saving the extra £150 per month.

This doesn't account for any penalties you may pay for repaying early or any reduction in interest but it's a good start.

Crabman

If your balance with this month's payment out of the way is £4513.30, and you're paying £386.70 per month (£150.00 + £236.70), I'm thinking it will take 12 months to pay off £4253.70 (11 x 386.70), with a final payment of £259.60.

Is there any interest added on to the amount owing? I may have misunderstood your situation/payments (:o) so ignore me if someone else gives a different answer

robotgirl_2

First of all, make sure there are no charges for paying the loan off early. **EDIT: You've already mentioned they won't accept overpayments, sorry, I missed that bit!**

Secondly, is this the settlement figure to pay it off now, or the total you owe (including all interest). I ask because I recently paid off a loan to my bank 12 months early and the figure was LESS than i expected because they had to take off 12 months worth of interest (about £400!)

If £4750 is the amount you need to repay altogether and there are no penalties/rewards for paying early, then your sums should look like this

236.70 + 150 = 386.70

4750/386.70 = 12.28 - this means you will pay 12 more payments at 386.70 (totalling 4640.40) and one aditional payment of £109.50 (4750 - 4640.40).

Hope that helps!

Imelda

As above, probably about 12 months. To work it out more accurately, what is the interest rate of the loan? and how many actual monthly payments are there left?

iamashoppingaddict

Hiya,

Well the loan was fixed interest so they said in the documents the amount you will repay is ....... (can't remember what it was off the top of my head).

So basically I would only be cutting the loan down by 6 months by putting an extra £150 away for it. Am I right?! LOL

*is hopeless*

iamashoppingaddict

Imelda wrote: »

As above, probably about 12 months. To work it out more accurately, what is the interest rate of the loan? and how many actual monthly payments are there left?

The interest rate is 5.9% and there are 18 more monthly payments to go.

Imelda

ok, using the snowball:
http://www.whatsthecost.com/snowball.aspx

I have worked out you actually owe £4068.02, that is what monthly payments of £236.70 over 18 payments @ 5.9% work out to. I guess there is a penalty for you repaying early???
Assuming there's not, if you saved £150 per month in an account earning 4% interest after tax, after 10 months you would have about £1520 so if you started after Christmas you would be able to pay it off by November 2008 at the latest.
You'll have to check whether there is a penalty though....

Imelda

And you're not hopeless, it's not easy, I'm not entirely sure I'm right either and I work with numbers all day!

I'm hoping someone with more of a clue will come along soon......

And it's not *only* 6 months, it's 1/3 of the term left! That's a great achievement...

Do you have any other debts? You might be better off paying those off with the £150, unless they are on 0% or low LOB deals. It can be very tempting to dip into money in a savings account when you have a tight month......

iamashoppingaddict

I have two other debts. One with a virgin CC with is on 0% until December 2008 and I'm paying £50 a month off that so it will be clear by that date. The other debt is my car which finishes in 2011 but I'm fairly comfortable by that debt. (as much as you can be by a debt!)

I'm currently working two jobs and basically what I earn from the pub covers the loan payment so in effect once I've paid the loan off I'll be £236 a month better off and will be able to get rid of the pub job which is completely tiring me.

*sighs* so i have a few more months to go. Well its my mess - so I'd better get myself out of it!! :-)

Imelda

Sounds like you've got it sorted!

Only thing I would suggest, maybe just pay the minimum on the 0% card and save the rest, that way you'll get the interest on it too. Also, check Martin's article on savings to check you're getting a decent rate (I think the best at the moment is 6.41%).
It may not seem like a lot of interest but it might make a little bit of difference, eg you may be able to quit the pub one week earlier....

Good luck!