Paid extra money into loan account, can I get it back?

vic_msn

I had taken a loan from HSBC in 2017 at 16.7%.
I was new to the country and was in urgent need to cash and so took the loan, and again back in 2018 I needed money for some family expenses, so I applied for a top-up loan for £25K with HSBC at 6.7% for 6 years. I was able to pay off the remaining amount of the original loan with this new loan.
This week I had about £6K of money I had saved over the years and I was curious if I could reduce the interest I pay towards my loan.
So I paid this £6K into the loan account, thinking I could again apply for a new loan for the remaining amount at an even reduced rate (<6%)
But I was offered only 7.9% by HSBC (bummer). 
What makes it worse is when I realised I hadn't saved any interest by paying this £6K into the loan account, as it had just brought down the loan tenure and if I keep paying the monthly direct debit, I would still end up paying the same amount (~£30K) for the £25K borrowed. I wish I could get the £6K I have paid into the loan account.
I have a decent credit history with no missed payments and have always stayed under the 10% of my credit card utilisation (paid in full each month) and have no other debts.

[Deleted User]

No, you can't get it refunded.

But you're wrong about not saving interest, as you're now not paying interest on that 6k for the remainder of the term.

You did the right thing.

vic_msn

Deleted_User said:

No, you can't get it refunded.

But you're wrong about not saving interest, as you're now not paying interest on that 6k for the remainder of the term.

You did the right thing.

Thanks for the reply, but my monthly payments remain the same and if I don't close the loan now (which I can't)
I would still end paying the original amount owed albeit now in 40 months instead of 52.

[Deleted User]

No you won't.  Interest is calculated daily so it's impossible you'll pay interest on a balance that doesn't exist.

If your payments have stayed the same, then there will simply be fewer of them.

vic_msn

I have made 18 payments thus far £418 and a one time payment of £6,000
The remaining tenure is now 40 instead of 53.
So if I keep paying £418 every month for 40 months, I would have paid :
418x58 = £24244 + £6000 = £30244 (which is the amount I owed at the end of 72 months initially)
Or are you suggesting the monthly amount would come down as I near towards the end of the tenure?
Its a personal loan and not a mortgage.

[Deleted User]

No, I'm suggesting that you will make fewer payments, and the total will equate to a reduction of interest on 6k for 40 months. 

If the total forecast amount payable has not changed, then you've been given the wrong figures.

Personal loans and mortgages work the same way.

yksi

I had a loan with HSBC and also paid a lump sum early. It seems like things have confused you, probably due to the way they document the loan and repayments and interest.

You definitely pay less interest. The problem is that right now is they don't break down what is owing as principle and what is owing as interest. So it's appearing as if you've merely knocked £6k off the total owing, but that old total included the interest until the end of the 72 months. That's changed now and they need to recalculate it for you. Ask them for a current settlement figure. That will tell you how much is owing now and you'll be able to see that you've saved a chunk of interest. You don't need to actually repay it all now of course.

vic_msn

yksi said:

I had a loan with HSBC and also paid a lump sum early. It seems like things have confused you, probably due to the way they document the loan and repayments and interest.

You definitely pay less interest. The problem is that right now is they don't break down what is owing as principle and what is owing as interest. So it's appearing as if you've merely knocked £6k off the total owing, but that old total included the interest until the end of the 72 months. That's changed now and they need to recalculate it for you. Ask them for a current settlement figure. That will tell you how much is owing now and you'll be able to see that you've saved a chunk of interest. You don't need to actually repay it all now of course.

Yes, I can see that I can save about £2,700 in interest if I close the loan today.
But lets assume a case where I won't be making any further bulk payments or closing the loan and continue to pay the remaining instalments will I have actually saved any interest at the end?
Could I calculate interest paid over 59 (19 paid + 39 remaining) months instead of 72 months (original tenure) for the same APR?
Will that show my savings?

[Deleted User]

Yes.                        

vic_msn

Another question pls..was I too eager to apply for a new loan to get reduced rates?
If I had waited for a month or two and once this reduced balance has been reported too the CRAs would I have had a better shot at getting a reduced APR?
Have I spoiled my chances because of these hard searches now?
My experian credit score has already come down because of the hard search, guessing the equifax one will come down too.

[Deleted User]

It's fine if your scores come down.  They're not used for anything and your Experian one has dropped because you've reduced the debt.

You'll have a greater chance of acceptance if you're carrying less debt, but it depends on the wider picture.