Advice on final settlement figure

Dott2018 · 16 July 2018 at 3:48PM

I took out a loan of £15,000 over 60 months with AA loans in August 2016 at an interest rate of 8.9% pa.
My repayments are £308.15 per month and so far I have made 23 repayments. There is no early repayment charge under the terms and conditions and can be settled in full or part at any time.
The total interest payable is £3,489.00 and is added to the amount of credit at the beginning of the agreement. The monthly payments pay off both the amount of credit and interest.
I requested a final settlement figure today from the AA which they quoted as being £10,401.08 valid till 15th August.
I am unsure whether this amount is correct and I would appreciate any comments.
Thanks
Robert

campbell19925 · 16 July 2018 at 3:58PM

£15,000 + £3,489 = £18,489 total payable.

23 x £308.15 = £7,087.45

£18,489 - £7,087.45 = £11,401.55

£11,401.55 should be the sum still left to pay if everything you said above is correct.

[Deleted User] · 16 July 2018 at 4:09PM

campbell19925 wrote: »

£15,000 + £3,489 = £18,489 total payable.

23 x £308.15 = £7,087.45

£18,489 - £7,087.45 = £11,401.55

£11,401.55 should be the sum still left to pay if everything you said above is correct.

Loans don't work like that. Interest is calculated daily.

OP - the figure seems about right, with the two months early settlement fee.

madvicker · 16 July 2018 at 4:35PM

http://www.financecalcs.co.uk/Calcs/Settlement.php

Use that and enter the figures. I just did and it gave a settlement figure of £10,131.08. That doesn't include 2 months interest which is generally what they charge for an early settlement. Remember that your payments include a portion of the interest and a portion of the capital payments each month. Early settlement means you won't pay the remaining interest on the balance and so will be a lower amount than the 1st poster's calculation.

Advice on final settlement figure

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