Loan

[axel132132]

Hi all

I have looked on internet and have not been able to find anything to answer my question so ima post it here cheers

I have a 5k Loan, i hear that if you pay it off early you have to pay an extra month which is bizzare so if i have to pay 5k back id actually have to pay like 5200..

I have the 5k in my account would i be better transferring the money to another bank account + transfer the direct debit to that account and just leave it all to pay itself off then id get interest on my 5k + pay 5k back instead of more..

Is this right?

Cheers

 

[topquark]

Every loan agreement has it's own terms/conditions Axel, so it will depend what those terms are.

 

[snowhead]

You could end up paying far more than 1 month penalty.

The only people who can tell you the actual costs are the people that lent you the money.

Look at it the other way round, if you had lent someone some money and were expecting interest back on the the loan, you'd want compensation for them paying off early.

 

[RogertheBodger]

Hi Axel.
Why don't you get in touch with your loan provider and ask them for a settlement figure, at least you will then know what you are faced with. If you have a loan with monthly repayments, then the amount you will have repaid by letting the loan run it's course will be far more than £5200. I doubt very much that the interest you would earn by keeping the money in a savings account would be greater than the monthly interest on your loan.

 

[axel132132]

I borrowed 7500, so they said i owe like 9000 with interest, ive been paying it off now for about 2 years so now i dunno what i owe i just pay it off but my settlement figure is £4663.84 - They said i pay 30days interest ontop of what i owe.

So basically im better off setting up an account with say Halifax - Get £100 for opening account, transfer £4500 (Or work out exactly what i have left to pay by asking how many more months) and then just transfer the direct debit to that account that way im getting £100, + interest on what i transfer + not paying the extra 30 days so surely this is better right?

 

[trev]

Axel, have a think about this and its pretty easy to work out. Your settlement figure as at today's date is £4663.84 + whatever 30 days interest is, now take your monthly payment and multiply it by the number of months left to run to give you the amount you will pay if the loan runs it's full term. Whatever is the cheapest course of action, take it.
It's incredibly unlikely that any account will give you enough interest in your £5k lump to break even

 

[axel132132]

Umm im crap with money, I pay £187.35 a month, would the 30 day interest be the % APR of what i have left to pay or a % APR of the full amount?

So what you saying im better paying it all at once? Or open a new account?

I think open a new account due to getting £100 + not paying the 30 day interest + getting interest (wether it only be £20 over 2 years)

Cheers

 

[trev]

Contact your loan provider and ask them what the 30 day interest amounts to and add that to the £4663 figure they gave you this will give you a total settlement figure. I can pretty much guarantee it'll be cheaper to pay the loan off now.
You can the take that £187 each month and either put it into some sort of investment or a pension

 

[oldtimer]

The thing is you borrow money because you need it and they tell you how much a month for the next ?? years only problem is that if you want to pay it off early you will still pay the same unlike the mortgage where as long as you are not in a special deal they give you a cost and you pay it.

Although I am not try to give you a lecture but you need to get more money savvy I remember years ago I asked for a loan through my then business account and they said no you have to take a Scotloan as it was called at the time so I asked how much will I pay back for both loans the difference was massive as the Scotloan was more like a credit card loan so I said give me the loan through my business account or I will go elsewhere and it worked a treat but since then 26 years ago I have never taken out anymore loans so if I need a motor I buy it at 6 months old at the auctions for 60% of the forecourt price then I save £100 a month and 8 years later have run the car into the ground I have £9600 to back to the auctions. So get savvy shop around and dont run a deficet on your credit card as I said to my daughter would you pay £700 for a £400 TV and she said no but who would be daft enough to do so I said anyone who puts it on a credit card yes she has one but like me its cleared every month

 

[trev]

Axel if you can't cope with sums relating to money how do you cope with cable calcs and the adiabatic?

Sorry mate don't answer that I just thought I'd get it in as a quick joke before anyone else did

 

[axel132132]

I can do maths sums, i have a A level in maths.. And a A in GCSE maths

My issue is working out how loans work, ive never done them before so no idea but apparently you pay the interest first.. So its better to pay it off monthly with £100 for opening account than paying off at once and having settlement figure.

 

[UNG]

Umm im crap with money, I pay £187.35 a month, would the 30 day interest be the % APR of what i have left to pay or a % APR of the full amount?

So what you saying im better paying it all at once? Or open a new account?

I think open a new account due to getting £100 + not paying the 30 day interest + getting interest (wether it only be £20 over 2 years)

Cheers

How many more months are you paying £187.35 for this could provide the answer to your dilemma to pay it off or not to pay it off

 

[axel132132]

Not sure, dont know how to find out either do you think they would tell me if i rang them up?

Cheers

 

[Johnuk]

just ring them up, they would tell you,

if u have ppi on the loan, go to that martin guys web site from daybreak, he has free guide and letters to send so if you do have ppi insurance you claim 100pct back, if you got throw a company they take 40 to 60 pct of the ppi you get back

i did it my self and got 100pct back
my mate did the same throw a company they taken 40pct of wot he got lol

 

[Darkwood]

Just a point out here axel, the loan is designed by a team who specialise in making profit by lending money with interest and/or clauses and penalties..... i very much doubt you can find a way of transfering the money into another scheme or system as so to break even, if this could be done it would effectively be a interest free loan and if you who openly admits they dont understand how it all works could achieve this then any money minded pro' could take advantage of such a scheme and render the whole banking system useless. This is why you have penalties for early settlement etc etc they are protecting the structure of the loan and making sure people dont get low interest loans and repay straight off as it wont be worth their time and effort setting it all up.
Its the same with mortgages, you could in effect get a mortgage at one rate but 3months down the line a better mortgage provider could offer better rates and you transfer mortgage but first mortgage company has barely made enough interest to cover all their processing and legal fees, this is why they attach a early repayment penalty to cover their backs and make sure they make a pre-determined minimum profit from you.