loan maintenance charge

anujamin88

I took out a loan of £7000 in january 2020 at 7.9% (or thereabouts) with monthly repayments of £218 over 36 months. but i've seen that i've being debited an additional £39-45 a month- like an overdraft fee (my current balance to pay off is £6475, when it actually should be £6346...so the amount to repay is increasing)  Is this normal/has this happened to anyone else? because from the paperwork i received regarding the loan, theres no mention of any fees. 

[Deleted User]

anujamin88 said:

I took out a loan of £7000 in january 2020 at 7.9% (or thereabouts) with monthly repayments of £218 over 36 months. but i've seen that i've being debited an additional £39-45 a month- like an overdraft fee (my current balance to pay off is £6475, when it actually should be £6346...so the amount to repay is increasing)  Is this normal/has this happened to anyone else? because from the paperwork i received regarding the loan, theres no mention of any fees. 

That sounds like the interest that is being added to the loan.  How have you calculated that the balance of the loan should be £6,346?  

cymruchris

At the APR you've quoted - £218 a month is the correct payment over 3 years. Is the loan with a major financial institution? What did your paperwork say?

comeandgo

Are your repayments arriving late and could this be the fee for late payment?

[Deleted User]

It's simply the interest.

Nothing to worry about.   You'll still clear the loan at the end of the term, as long as you maintain payments.

kuratowski

As said above this is completely normal.  36 payments of £218 is £7848, so you are paying back £848 more than the £7000 you borrowed (this £848 is the interest) and these figures should have been quoted to you in the loan documentation.  The interest is being charged gradually over the loan term, so that's why the current loan balance hasn't reduced as much as you expected after 3 payments.