Sainsbury’s Loans system change

LucyMac123

Hi everyone, I want to get peoples advice/experience/opinions on whether my recent experience of requesting a settlement for my Sainsbury’s loan taken out in 2016. It’s a bit complicated so bear with me. 

I borrowed £10,000 and was offered the loan with £3500 interest which I agreed to and then started making monthly payments. Sometime last year Sainsbury’s bank changed their system and I was given a sort code and account number where previously I’d only had a loan agreement number, all fine so far.

I rang Sainsbury’s yesterday to ask for a settlement figure and was given £3150 and then when I asked what the balance was I was told £3080. I was expecting to settle the loan for less than I had left to pay monthly (especially as I’d requested a settlement figure a few years ago and the saving was over £1000) so I asked the person to explain why this was.

I was told that when they changed their system the new system only received the balance left on my loan and adds the daily accrued interest every month. So with that in mind what I would actually pay if I stuck to monthly payments was more like £3360 and I would make a saving of about £180. 

This sounds to me like they’ve started adding more interest onto a loan I had already agreed a fixed interest on. 

Does anyone have experience of this? Or understand what is happening here because I’m baffled and feel like it’s not fair. Please help!

[Deleted User]

They haven't added any more interest. It's simply the way it's presented.

A settlement figure is your outstanding balance (without any future interest) plus up to two months interest. The settlement can't ever be less than your outstanding balance. So everything looks good.

Sandtree

The balance doesnt include the future interest, its how much of the principle amount that is still outstanding. The settlement is therefore that plus the penalty months of additional interest for early settlement. 

Were you not to early settle you'd be paying £3080 + X months of interest (where X is the number of months left on the term). Interest is calculated monthly and so earlier months attract more interest and later months less - its not level in absolute terms