To understand loan

andriustuff

Hi guys, 
Please help me to understand the loan.

How much you are borrowing (this is the amount of credit)			£17,500.00
	The fixed amount you must pay back every month.  Your last repayment may be different and we will write to you to let you know what this will be			£316.41
	How many monthly repayments you will make			60
	How much you are borrowing plus the interest you will pay (this is called the total amount payable)			£18,984.60
	The length of the loan in months			60 months
	Annual Interest Rate - The fixed interest rate you agree to pay			3.24% (fixed)

Everythink looks okay, but I noticed, every month lloyds bank charge me back (interest charge 45 £
If they charge me that all 60 months that will be  60 x 45£ = 2700£
New total is 18984 + 2700 = 21684£

Please advice why they charge me extra interest charge?

Many thanks. 

[Deleted User]

They don't charge you extra interest charge.

They're just charging you the interest agreed in the terms.  It's calculated daily and added monthly.

Your total payable remains the same.

andriustuff

zx81, 
Thank you for the promt answear. 
But how its work? Can you please explain me. 

[Deleted User]

You start with the amount you borrowed.

Each day, interest is added, increasing the balance.

You then make a monthly payment, reducing it back down by the amount of the interest plus some of the capital.

Over the next month, slightly less interest is added, as the capital is lower.

You make another monthly payment, which reduces the balance further by the interest and more of the capital.

And so on.

andriustuff

Thank you very much.