Settlement figure more than original loan

Fu22y_Dunlop

I took a loan of £22,600 from Post Office Money in November of last year. I was in a bad position at the time and signed up for the loan with an APR of 17.9%. Since then I have got more organised and saved a few thousand with the idea of paying down the loan or refinancing to get a better rate. I was surprised when I obtained the settlement quote and it was £23,025.79. I did ask how the settlement could be more than the original loan after six monthly payments but the operator was extremely unhelpful and told me they could only give me the information on their screen. Given the rate and the term of 84 months I wasn't expecting the settlement to be much lower than the original principle but can't see how it would be higher. Is it possible the settlement could be higher or have they made a mistake.

Post Office Money provide minimal information with a paper loan agreement only given after I rang to request it. There is no online portal and phone contact is the only way to get in touch. I have requested a loan statement and also raised a complaint. I didn't wish to complain immediately but the phone operator told me this was the only way to obtain a further breakdown of the settlement figure. The operator did mention that the settlement was calculated with interest of a further 58 ( I think) days from the date the quote was obtained. 

The only other issue I can think of is that I asked to change the direct debit date at the start of the loan. This delayed payment slightly from the original DD date but I was told it would not be an issue at the time. All payments have been made on time. Any advice is appreciated.

Tucosalamanca

Yr1 interest is approx 4k, how much have you paid back already? 

Fu22y_Dunlop

Total repayments of £2,738.28. Am I liable for a full year's interest?

k3lvc

Fu22y_Dunlop said:

Total repayments of £2,738.28. Am I liable for a full year's interest?

It all depends what your loan agreement says - given you mention 58 days interest there's a chance this is the penalty but certainly doesn't explain the high number

TadleyBaggie

Well I make it at that APR and term, you will pay something in the region of £17K in interest. At the start of the loan most of your payment goes to paying off interest, so the principal reduces at a much lower rate than you might expect.

According to a loan calculator I used, after 6 months the amount owed is about £21,750. When you add two months interest for early repayment (roughly £660), I make it £22,410 or so, so not much less than the original loan. So unless there are some other fees, their figure does seem a little on the high side.

Tucosalamanca

Almost certainly not liable for a year's interest.
However, as the interest is currently over £10 per day, it's easy to see how a £425 difference could show on the system (exact date of loan being created, time taken for funds to reach you, when interest added, when payments received and so on).

I'd wait for the statement and see what it reveals. Hope it works out for you, that's a big commitment to honour. 

Fu22y_Dunlop

Thanks for the input. The settlement figure was a few days after a payment so may be that it wasn't included in the workings. I will await the statement.

[Deleted User]

Tucosalamanca said:

Almost certainly not liable for a year's interest.
However, as the interest is currently over £10 per day, it's easy to see how a £425 difference could show on the system (exact date of loan being created, time taken for funds to reach you, when interest added, when payments received and so on).

I'd wait for the statement and see what it reveals. Hope it works out for you, that's a big commitment to honour. 

It's a very large loan !