What did I miss?

Ada2018

Hi everyone

So I just received my first annual statement for a loan and have realised that I am paying interest every month. I was told this at the time:
Amount borrowing: £9808
Amount payable: £13,091
Duration: 120 months (10 years)
I was never told I would incur interest monthly: eek: .

What did I miss...
Verbally I was definitely missold so just looking at the agreement I signed called a fixed sum loan agreement (far from it though!).

Takmon

Ada2018 wrote: »

Hi everyone

So I just received my first annual statement for a loan and have realised that I am paying interest every month. I was told this at the time:
Amount borrowing: £9808
Amount payable: £13,091
Duration: 120 months (10 years)
I was never told I would incur interest monthly: eek: .

What did I miss...
Verbally I was definitely missold so just looking at the agreement I signed called a fixed sum loan agreement (far from it though!).

I don't see the problem... this is how loans work you pay interest that is calculated over the period of the loan. It is a fixed sum loan because you borrowed a fixed amount.

[Deleted User]

Unless it was an interest free loan, you'll always pay interest.

sourcrates

If you can find a loan product that doesn`t charge monthly interest, i`d snap it up.

TadleyBaggie

So what did you think the difference between the amount you are paying back (£13,091) and what you borrowed (£9808) was?

KatrinaWaves

Ada2018 wrote: »

Hi everyone

So I just received my first annual statement for a loan and have realised that I am paying interest every month. I was told this at the time:
Amount borrowing: £9808
Amount payable: £13,091
Duration: 120 months (10 years)
I was never told I would incur interest monthly: eek: .

What did I miss...
Verbally I was definitely missold so just looking at the agreement I signed called a fixed sum loan agreement (far from it though!).

You're just confused. The monthly interest is what is making up that extra £3000 or so.

Its monthly because if you paid it back tomorrow, you would only pay SOME interest, not the whole £3k of interest...

Clive_Woody

Half term already?

lees80

Ada2018 wrote: »

Hi everyone

So I just received my first annual statement for a loan and have realised that I am paying interest every month. I was told this at the time:
Amount borrowing: £9808
Amount payable: £13,091
Duration: 120 months (10 years)
I was never told I would incur interest monthly: eek: .

What did I miss...
Verbally I was definitely missold so just looking at the agreement I signed called a fixed sum loan agreement (far from it though!).

No - verbally you definitely misunderstood. Not a single bank in the world will offer up a 10 year loan at 0%.

foxy-stoat

Ada2018 wrote: »

What did I miss....

You missed reading the credit agreement before you signed it.

Dont worry, many people come on here and say they got mis-sold or got scammed without even knowing what the lender's terms were.

A_Lert

"Fixed sum" in this case means you've borrowed a certain amount, and you have an agreement to repay a certain amount each month for 120 months, at the end of it you'll have fully repaid early.


Interest being charged each month benefits you if you're able to make early repayments, compared to if the "interest" for the whole ten years was immediately added at the start. Conversely if you miss payments, additional interest will accrue.

Ada2018

So I know I am paying interest on the £9k as it will be 13k I'm actually paying in the end.

Every month I pay a fixed £108.26 a month which is about £13k after 120 months...BUT my annual statement also says I'm paying £58 interest (approx) every month aswell. So I'm only really actually paying £50 a month.

This is the bit I don't get? I thought the interest was the difference between the loan amount and the final amount.