Loan with Welcome Finance - Advice Needed

shane291179

HI

Last april I took a loan out with Welcome Finance (I Know I know!), Anyway the loan was for 3200 over 36 months with the payments being 150 a month (Total 5400 being paid back).

Now I assumed that the 150 would be allocated at £80ish paying off the loan with the other 70 being paid off interest.

Today I got a settlement figure of £2800 when I was expecting something more like 2400!

Can anyone help me with firstly explainning how welcome would allovate the monthly payment towards my loan and also explaining why the amount I owe is still so high. Also suggestions on best way to get out of this situation would be great.

I recently asked them how my loan ould be effected if I paid a chunk of it off and they were quite negative about this, but wasn't sure if this was becasue it wasn't in my interests to do this or there's.

Any advice or help would be greatly appreciated, thanks

CLAPTON

can you add:
how many payments have you made
what is the APR
did you take out PPI if so how much was the PPI etc.

shane291179

I have made 10 payments so far (haven't missed any and all upto date etc)

Not too sure about APR as haven't got the paperwork infront of me but I think it was around the 50% mark.

No Didn't take out any PPI or any other extra they tried to include and made sure that nothing extra was add to the loan before I signed.

CLAPTON

looks like the APR would be 55% based on 36 payments of 150.

so after 10 payments of 150 you would have paid
approximately 934 in interest
and 566 in capital
total of 1,500

so your capital owing would be 2634
they can add a couple of monthly interest say 170 so
setttlement figures should be about 2,804 approx

which seems about right I'm afraid.


your early payments are largely interest and only a little capital because obviously as you owe more you pay more interest

so your first 150 is made up of interest of 101 and capital of 49

i.e. interest on 3200 at monthly interest rate of 3.16% (equivalent to 55% APR) is 3200 x 3.16% = £101


thas how it works I'm afraid.

Kez100

Interest accrues on the balance so you always pay more interest at first but very little repayment of loan. Once the loan starts to come down after a lot of repayments then the interest charged will lower and you will find more of your 150 goes towards repayment of the loan.

Interest is not an amount equal per month.

Edit - I see someone has explained it above far more clearly.

shane291179

After thinking about it I thought that might be the case but thanks for the explination.

Now if I was to pay off say 1000 of the loan ( as long as there are no charges) would this make a difference to helping me save money or do you think they would just reduce my monthly payments so that they can still charge me interest as long as they can?

Also becasue of the high APR would it be worth while trying to move it to a loan with a much lower APR?

Thanks again for all the help so far

CLAPTON

Getting a lower APR loan would mean you can pay the old one off and save interest ... basically if you can borrow 2,800 paying less than £150 for less than 26 weeks then you should be better off.


whether making partial payments helps depends upon the T&Cs of your loan.
Unlike the settlement figure which is regulated by the CCA, partial payments are unregulated and may not reduce the overall interest payments.