Natwest Unsecured Loan - Something very odd

CXG1979

HI All,
I took out an unsecured loan for £35,000 back in Oct 2019, with a reasonable interest rate.  What I find odd, is the way the loan is managed.  Any other loan I've had, or currently have, have the total shown of amount borrowed + interest, and shows your monthly payments so you can see what is left to pay to the penny, and how long, plus a consolidation amount if requested.  With Natwest, it shows as an 'account' in the app, and currently shows £32,811 after several years of paying £566 per month. It shows my monies going in, then within a few days, interest going back out in varying amounts each month, £377, £414, £477 and so on.  Is this right?  It's only meant to be a 10 year loan, but based on this method, it seems to be going beyond 10 years. I find the whole management of it very odd. Should I be going into my branch and say something isn't right, or is this in fact correct and just something I'm not used to seeing? Thanks.

CXG1979

To add, I took a six month pay gap during covid, and taking that into account I have paid back to date £19,817 on this loan.

CliveOfIndia

CXG1979 said:

currently shows £32,811 after several years of paying £566 per month.

In the early stages of a loan, most of your payments go towards interest with only a small portion repaying the capital (this is not front-loading of interest, it's just down to simple maths).  Towards the latter stages, the interest amount decreases and most of your payment goes toward the principal.

CXG1979 said:

To add, I took a six month pay gap during covid, and taking that into account I have paid back to date £19,817 on this loan.

If you take a payment holiday this will naturally extend the length of the loan, as well as (usually) increasing the amount of interest you pay overall.

Clive_Woody

If you had paid back per contract £566/month for ten years then you're paying £67,920.

As stated the early years you're mostly covering interest and only reducing capital slightly, if you then took a 6 month repayment holiday then I assume interest would still be charged, so your balance would have gone up considerably during that time. With this payment holiday your payments will go beyond 10yrs....unless you make overpayments.

MorningcoffeeIV

For ease, the OP asked this and was fully answered several months ago.

I don't think that there have ben any significant changes in the way that maths works since then, so probably best just to refer back to that thread.

https://forums.moneysavingexpert.com/discussion/6385724/natwest-loan#latest