Need help!

MagicMarker

Hi Folks,

I need some advice on this before I call the bank.

To cut a long story short, around last April (‘09) I contacted the Bank to refinance a loan of mine, this was to cover a couple of missed payments, a credit card and an overdraft (I had been travelling and unemployed when I got back so fell behind a little.). This was all sorted with the bank and a new repayment plan organized, all is well.

I’ve noticed since that every 3 or 4 months there’s substantial interested added to my loan. I just assumed this is how interested is added, didn’t think much of it other than being annoyed that with every 3 payments I’d make I’d pretty much have 1 payment taken away due to interest.

I had interest again added today as per usual, and just out of curiosity I decided to tally up what my own monthly payment adds up to over the 5 year term.

My original loan amount was approx 27k (I need to double check the credit agreement to confirm).
I pay 580 per month which equals 34800 over 5 years :eek:.

Okay says I, this much be including the interest owed. But if this is the case, then WTF is interest being applied to my account every 3 months for??? The interest applied ranges from 500-700 which is a possible 14k over 5 years! :eek:

Surely to Christ my 27k loan isn’t costing me 20k+

HELP!

pjmn

Relax!

If you are correct in that the original amount was E27k - then at a rate of c. 10.5% - your monthly repayment would be c. E580.

Over time as the capital amount reduces your quarterly interest charge will reduce.

Assuming your figures are correct you will repay slightly less than E35k over the five year period.

Check your loan agreement and revert if figures are different.

Regards,


pjmn

MagicMarker

*Wipes sweat off brow*

I panicked there for a second. I was adding the interest incurred on top of my total repayment amount! :rolleyes:

I'm slow.

One thing though, the interest added today is more than usually, not less. Why would that be?

pjmn

Bit unusual...

a) are you on a variable rate - could interest rate have increased?

b) would you have missed any payments recently or been late with them - could cause a surcharge?

c) could be a 'longer' quarter - i.e. more days - think this one is unlikely...

d) if none of the above - I'd say ask bank to explain same...

best of luck...

pjmn

MagicMarker

Nope, no payments missed at all. Maybe it's a variable rate, I suppose I should know this, I just make sure it's paid and forget the minor details! I'll check the credit agreement when I get home to clarify things.

Thanks!