Loan settlement figure higher than balance

ash23123

I have a loan with Sainsbury’s bank and have asked them for a settlement figure. It’s come back higher than the balance. 

Whenever I’ve settled loans earlier in the past the figure has been much lower than the balanced so I’m confused as I thought I’d save some money. Could someone advise please? 

Original loan amount £14,500
APR 7.10%

Term 60 months 
Balance £10,659.19
Repayments left 42 
Next payment due on 8th June 

The settlement figure they've given me is £10,810.01. 

They said “ This figure includes up to 58 days interest - 30 days additional interest for settling early and 28 days interest which takes you to when the settlement quote expires.“

Any help would be much appreciated  

molerat

The balance will be the outstanding balance at a set point in time, the capital balance plus daily interest since the last payment which is incurring further interest on a daily basis.  As they have stated, the settlement figure includes the allowable interest on early settlement.

MallyGirl

what figure do you get if you multiply your repayment amount each month by 42?

bradders1983

They literally explain why its higher: the penalty for early settlement is 30 days extra interest.

PixelPound

It is the way with loans. Have you checked T&C for penalties for overpayment and partial settlement? Sometimes the interest charged is for full settlements and there is no cost to over paying. In which case you could make the equiv of 40 months payments and let it run as normal for the final 2.

Clive_Woody

I think you are mistaking your current balance and the total amount yet to be repaid. Your current balance is how much you owe today, but this amount will incur interest over the remaining duration of your loan and if you let the loan run it's course you will repay more than the current balance.

If you repay today you repay the current balance plus the 58 days interest. If you do not repay today you pay the current balance plus interest over the remaining term of the loan (which will be much higher).

siha

Hi, I have had a 15K loan from Sainsburys for 3 years with the rate of 8.1% which they charges for £474.88 pcm.
I recently checked on the Loan calculators @ the Money Supermarket which quotes as £468.76 which I suspect that my lender may hiddenly charge me extra ( £6.12 pcm ) for PPI ? 
Would it be legal ? or can I ask for refund of the difference ( £6.12 x 36 payments ) ?
Thanks 

[Deleted User]

There won't be any hidden charges and no PPI 

Your payments will be laid out in your agreement.

siha

Deleted_User said:

There won't be any hidden charges and no PPI 

Your payments will be laid out in your agreement.

Thanks for the response, mate.
If there is no PPI then why the payment figures is different & higher than the normal calculation from other lender ?
Borrowers are usually not aware of the lenders' calculation as they rely on lenders' honesty. Unfortunately, not all lenders are.
Should it be miscalculated / overcharging ?

[Deleted User]

Because it depends on how long after you borrow the money before your first payment.

Have you checked the agreement yet?  It's the only thing that matters.  

You won't any lenders outside of the Dog and Duck hiding fees, but you'll find a lot of borrowers not reading what they agree to.

Petriix

I think it's normal for them to apply a penalty of two months' interest on early settlement. However, as stated above, I believe you might be able to overpay (without completely clearing the balance) without penalty. I saw someone recently claim to have settled their car finance by overpaying nearly all of the outstanding balance before requesting an updated settlement figure which, consequently, only showed the two months' interest based on the very small outstanding amount. Obviously you need to check your specific terms and conditions.