Personal Loan - early settlement
Discussion
Hope someone can help on early settlement on personal loans.
Example if from Tesco current £7,500-£15,000 APR is 4.1%
Lets say borrow £15,000 today
"Early settlement
You will be charged up to two months interest if you choose to settle your personal loan from Tesco Bank early."
What is the amount charged?
http://www.tescobank.com/loans/
Example if from Tesco current £7,500-£15,000 APR is 4.1%
Lets say borrow £15,000 today
"Early settlement
You will be charged up to two months interest if you choose to settle your personal loan from Tesco Bank early."
What is the amount charged?
http://www.tescobank.com/loans/
using tesco calculator
Monthly repayments £446.00
Total amount payable £16,056
Loan amount £15,000
Representative APR 4.1%
Length of agreement 3 years and 0 months
If it was £15,000 0% APR for 3 years, it would be £416/month
is the interest £446-£416= £30/nmonth?
therefore the early settlement would cost me £30x2 = £60?
Monthly repayments £446.00
Total amount payable £16,056
Loan amount £15,000
Representative APR 4.1%
Length of agreement 3 years and 0 months
If it was £15,000 0% APR for 3 years, it would be £416/month
is the interest £446-£416= £30/nmonth?
therefore the early settlement would cost me £30x2 = £60?
bit more digging doesn't seem as simple calc:
Question:Is there a fee if I settle my loan early?
Answer:Yes, you may be charged up to two months’ interest if you choose to settle your Loan early.
Although your repayment amount is fixed for the duration of your loan, the way that we allocate each monthly payment between the loan capital and the interest varies throughout the term. At the start of the loan, a higher proportion of your monthly repayment is allocated to repaying interest. However, as you start to make more repayments, we allocate less of the monthly repayments to repaying interest and more towards reducing the capital until your loan is completely repaid.
Therefore the early settlement fee of up to two months interest will vary in amount according to the size and duration of your loan at the time you choose to settle.
Now to try and find out what it might be if done early i.e. in the first few months and what the repayments would be if baloon payment were made
Question:Is there a fee if I settle my loan early?
Answer:Yes, you may be charged up to two months’ interest if you choose to settle your Loan early.
Although your repayment amount is fixed for the duration of your loan, the way that we allocate each monthly payment between the loan capital and the interest varies throughout the term. At the start of the loan, a higher proportion of your monthly repayment is allocated to repaying interest. However, as you start to make more repayments, we allocate less of the monthly repayments to repaying interest and more towards reducing the capital until your loan is completely repaid.
Therefore the early settlement fee of up to two months interest will vary in amount according to the size and duration of your loan at the time you choose to settle.
Now to try and find out what it might be if done early i.e. in the first few months and what the repayments would be if baloon payment were made
p1tse said:
bit more digging doesn't seem as simple calc:
Question:Is there a fee if I settle my loan early?
Answer:Yes, you may be charged up to two months’ interest if you choose to settle your Loan early.
Although your repayment amount is fixed for the duration of your loan, the way that we allocate each monthly payment between the loan capital and the interest varies throughout the term. At the start of the loan, a higher proportion of your monthly repayment is allocated to repaying interest. However, as you start to make more repayments, we allocate less of the monthly repayments to repaying interest and more towards reducing the capital until your loan is completely repaid.
Therefore the early settlement fee of up to two months interest will vary in amount according to the size and duration of your loan at the time you choose to settle.
Now to try and find out what it might be if done early i.e. in the first few months and what the repayments would be if baloon payment were made
Over 3 years total interest is 15000*(1.041)^3 minus the initial 15000, so total interest of 1921. Split over 36 months means £53 per month so total of £106.Question:Is there a fee if I settle my loan early?
Answer:Yes, you may be charged up to two months’ interest if you choose to settle your Loan early.
Although your repayment amount is fixed for the duration of your loan, the way that we allocate each monthly payment between the loan capital and the interest varies throughout the term. At the start of the loan, a higher proportion of your monthly repayment is allocated to repaying interest. However, as you start to make more repayments, we allocate less of the monthly repayments to repaying interest and more towards reducing the capital until your loan is completely repaid.
Therefore the early settlement fee of up to two months interest will vary in amount according to the size and duration of your loan at the time you choose to settle.
Now to try and find out what it might be if done early i.e. in the first few months and what the repayments would be if baloon payment were made
You said its not paid back at a steady interest rate, but this should give a simple ballpark figure
thanks to both above
the simple high level works as I managed to recreate in Excel IMPT PMT PPMT following
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
so if paid in the first month two months interest is £101
the simple high level works as I managed to recreate in Excel IMPT PMT PPMT following
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
so if paid in the first month two months interest is £101
zeppelin101 said:
No because the interest on the loan and the amount of the principle sum you have borrowed changes month to month.
Excel is the easiest way to work it out. Have a google on working out repayments and interest on term loans.
You're after IPMT (interest) and PMT (payment) formulae.
Surely the easiest way is to ask Tesco for a settlement figure.Excel is the easiest way to work it out. Have a google on working out repayments and interest on term loans.
You're after IPMT (interest) and PMT (payment) formulae.
berlintaxi said:
zeppelin101 said:
No because the interest on the loan and the amount of the principle sum you have borrowed changes month to month.
Excel is the easiest way to work it out. Have a google on working out repayments and interest on term loans.
You're after IPMT (interest) and PMT (payment) formulae.
Surely the easiest way is to ask Tesco for a settlement figure.Excel is the easiest way to work it out. Have a google on working out repayments and interest on term loans.
You're after IPMT (interest) and PMT (payment) formulae.
zeppelin101 said:
No because the interest on the loan and the amount of the principle sum you have borrowed changes month to month.
Excel is the easiest way to work it out. Have a google on working out repayments and interest on term loans.
You're after IPMT (interest) and PMT (payment) formulae.
I've done this and shown each month for say 36 months what the beginning balance, principal balance, interest balance and ending balance is. as a high level if doing additional payment calc, could i just put the beginning balance (less the additional payment in one of the months)?Excel is the easiest way to work it out. Have a google on working out repayments and interest on term loans.
You're after IPMT (interest) and PMT (payment) formulae.
Tesco Quote:
Question:Can I make additional payments to my loan?
Answer:Yes, you can make additional payments to your loan. How you do this depends on when you took out your loan. In both cases you need to contact us by telephone to do so.
Loan applications made on or after 11 June 2010
You can choose for your additional payment to be applied in one of two ways:
Reduce your monthly payment and keep the term of your loan the same, or
Keep your monthly payment the same and reduce the term of your loan.
Both options will give you an interest rebate, which means you will pay less interest overall on your loan, but you will get a greater interest rebate with Option 2.
tesco can take upto 10 days
so looking at other options, i.e. bank
Barclays states
"Repaying your loan early
You have the legal right to repay your loan early, in part or full, at any time. As well as any other interest that’s due, we’ll charge you a fee equal to 30 days’ interest. This will be calculated using the amount being repaid for a partial repayment or on the amount you owe us if you repay in full. For more information, call 0800 716 5982 5 or visit a branch."
so is this cheaper option if only 30 days of interest than tesco 2 months
so looking at other options, i.e. bank
Barclays states
"Repaying your loan early
You have the legal right to repay your loan early, in part or full, at any time. As well as any other interest that’s due, we’ll charge you a fee equal to 30 days’ interest. This will be calculated using the amount being repaid for a partial repayment or on the amount you owe us if you repay in full. For more information, call 0800 716 5982 5 or visit a branch."
so is this cheaper option if only 30 days of interest than tesco 2 months
I had a Barclayloan which I settled early. Similar scenario regarding early repayment.
I can't recall the exact figures but if I had say 5k to settle the loan. I overpaid 4900 one month. The following month paid the 100 etc to settle the loan. I only paid 2 months interest charges etc on that remaining 100.
Strange but true...
I can't recall the exact figures but if I had say 5k to settle the loan. I overpaid 4900 one month. The following month paid the 100 etc to settle the loan. I only paid 2 months interest charges etc on that remaining 100.
Strange but true...
Jimboka said:
I had a Barclayloan which I settled early. Similar scenario regarding early repayment.
I can't recall the exact figures but if I had say 5k to settle the loan. I overpaid 4900 one month. The following month paid the 100 etc to settle the loan. I only paid 2 months interest charges etc on that remaining 100.
Strange but true...
ah i see, strange that is.I can't recall the exact figures but if I had say 5k to settle the loan. I overpaid 4900 one month. The following month paid the 100 etc to settle the loan. I only paid 2 months interest charges etc on that remaining 100.
Strange but true...
i would have to go hsbc route as my main bank which is slightly different and worded complicated! the loan repayment is the same regardless of additional payments!
went through an online decision thing and would accept me for £15k and get funds pretty much instant!
am i missing something, as it seems a good way to buy a car as long as you can shift current car quick at a decent amount, plus on hsbc you can defer first payment for 3 months
HSBC:
Early Settlement
12. You are entitled to repay amounts due under this
agreement partially or in full at any time by giving us
notice. You can give notice in writing or by calling us
on 08457404404. It is necessary to pay all amounts
owed under the Agreement if you wish to terminate
the Agreement. Where you make any early repayment,
there may be a reduction in the amount of interest
you will have to pay. We are entitled to defer the early
repayment date by up to 28 days and to make a charge
equivalent of one month interest on the amount of the
early repayment.
Personal Loan
Terms and Conditions
Early Settlement
12. You are entitled to repay amounts due under this
agreement partially or in full at any time by giving us
notice. You can give notice in writing or by calling us
on 08457404404. It is necessary to pay all amounts
owed under the Agreement if you wish to terminate
the Agreement. Where you make any early repayment,
there may be a reduction in the amount of interest
you will have to pay. We are entitled to defer the early
repayment date by up to 28 days and to make a charge
equivalent of one month interest on the amount of the
early repayment.
Personal Loan
Terms and Conditions
p1tse said:
I've done this and shown each month for say 36 months what the beginning balance, principal balance, interest balance and ending balance is. as a high level if doing additional payment calc, could i just put the beginning balance (less the additional payment in one of the months)?
Tesco Quote:
Question:Can I make additional payments to my loan?
Answer:Yes, you can make additional payments to your loan. How you do this depends on when you took out your loan. In both cases you need to contact us by telephone to do so.
Loan applications made on or after 11 June 2010
You can choose for your additional payment to be applied in one of two ways:
Reduce your monthly payment and keep the term of your loan the same, or
Keep your monthly payment the same and reduce the term of your loan.
Both options will give you an interest rebate, which means you will pay less interest overall on your loan, but you will get a greater interest rebate with Option 2.
If you may make an overpayment it comes straight out of the remaining balance. The interest on the remaining balance is calculated either daily, or monthly so if you were to make a payment in the middle of the month the interest will either be adjusted the following day, or the following month. Easier to assume that you make the overpayment at the same time as the normal payment in which case that is added to your principal and the interest payment remains the same.Tesco Quote:
Question:Can I make additional payments to my loan?
Answer:Yes, you can make additional payments to your loan. How you do this depends on when you took out your loan. In both cases you need to contact us by telephone to do so.
Loan applications made on or after 11 June 2010
You can choose for your additional payment to be applied in one of two ways:
Reduce your monthly payment and keep the term of your loan the same, or
Keep your monthly payment the same and reduce the term of your loan.
Both options will give you an interest rebate, which means you will pay less interest overall on your loan, but you will get a greater interest rebate with Option 2.
Example:
I owe £7900 on a loan. Interest is calculated monthly. My normal monthly payment is £218.35.
If I were to add £1500 as an overpayment, the interest owed remains the same at £32.99 for the month, making my payment off the balance £1685.36. New balance is £6321.55 and next months interest is calculated at £25.96 on that balance.
Hope that makes sense.
The only time it changes slightly is if the interest is calculated daily, but assuming there are no payments in between then it will work out to be broadly similar.
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