MyJar loan settled early but doesn’t add up

DTMT
DTMT Posts: 13 Forumite
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in Loans
Hi
I was foolish enough to get a loan from MyJar in June this year to consolidate some other payday loans I had stupidly got into, I borrowed £950 over 12 months.
I recently gathered the money to pay the loan back 6 months early, and I did so yesterday. The outstanding balance was £687.13

The payment instalments are as follows:
29/06/2018 - £147.92
27/07/2018 - £152.49
31/08/2018 - £152.49
28/09/2018 - £152.49
26/10/2018 - £111.27
30/11/2018 - £152.49 = £869.15 paid off
13/12/2018 - £687.13 to the settle loan

So I’m confused at how that works, considering I’ve been paying the loan for 6 months and I’ve only paid £262.87 of the initial Balance when I’ve paid a total £869 in instalments. Why did I not only have to pay half the initial balance to settle? (£475)
Does that mean all the interest has been front loaded? If that’s the case would I be owed any money back from them because I’ve settled 6 months early? Surely they have calculated all that interest on the whole 12 month term if I’ve paid it all up front?

So is there anything I can do to get some of that interest back?

Any advice would be much appreciated

Kind regards
Dan

Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    None of the interest was front loaded.

    It's charged on a daily basis.

    You can't get any interest back, because it was the agreed cost of the money you borrowed.
  • TrickyDicky101
    TrickyDicky101 Posts: 3,513 Forumite
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    What was the interest rate? Including the potential for penalty interest of 58 days' on early settlement I make it your nominal rate is around 131% pa. That's a lot.

    EDIT: Oh yes, I can see they are extremely expensive lenders. Good for you paying it off early and please don't borrow from them again.
  • somethingcorporate
    somethingcorporate Posts: 9,449 Forumite
    TrickyDicky101 wrote: »
    What was the interest rate? Including the potential for penalty interest of 58 days' on early settlement I make it your nominal rate is around 131% pa. That's a lot.

    EDIT: Oh yes, I can see they are extremely expensive lenders. Good for you paying it off early and please don't borrow from them again.


    131% looks reasonable for myjar. A quick look shows they have rates more than double this.


    OP, as per the above you havent paid front-loaded interest, it's accrued daily (at a very high rate).
    Thinking critically since 1996....
  • ThePants999
    ThePants999 Posts: 1,748 Forumite
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    This picture is for mortgages, but it's true of any loan where the term and interest rate are fixed, and a flat repayment is used to pay it off over that term.

    capital-repayment.jpg

    Early in the loan, you're paying almost entirely interest, but the little bit of capital you pay back means that you owe a little less interest next month so pay a bit more capital... and while this effect is tiny at first, it snowballs until you're paying almost entirely capital by the end.

    As you can see, by half way through the term, you haven't repaid anything like half of the loan - plus you get charged a bit of extra interest when you repay early.
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