credit union interest rate ???

mussha

i just cant get my head around how it works with the credit union interest rate can anybody help. I know the interest rate on my loan is 10.56% and i think im right in saying the credit union interest rate is based on whats left on my loan. but i cannot get the figures to add up at all..

last few weeks payments are here. im ment to pay 70 per week i pay but i pay 80 per week
week 1
credit paid 55.25... int paid 24.75 ... loan bal 12,244.84
week 2
credit paid 55.14 ... int paid 24.86 ... loan bal 12,300.09
week 3
credit paid 55.03 ... int paid 24.97 ... loan bal 12,355.23
week 4
credit paid 54.92 ... int paid 25.08 ... loan bal 12,410.26
wee 5 loan bal 12,465.18
almost one third of my €80 payment is going to interest how do the 10.56% rate translate into the interest amount im paying?

any help would be great..
also ive about 3 grand in my shares account can i draw this against my loan now to get the interest down rather than waiting till ive 3 grand left on my loan with a small interest amount and clear my loan? im paying about €100 per month in interest at the min so any small thing could save me quite a bit in the long run.

Anyone

Interest is a % of your loan balance, not a % of what you are repaying.

The interest rate appears right(roughly €2 per week per thousand), but it looks to me that you are going in different times of the week. Interest is accrued daily, so it should be coming down a few cent every week instead of going up.

As to your 3k, no...you cant draw it down. You could apply to get it transfered to your loan, but I doubt they would allow it. It defeats one of the main principles of Credit Unions(members maintain their capital).

mussha

my interest is reducing by about 11 cents a week. and the payment happens at same time every week as its a direct debit payment. im just trying to work out a formula for calculating my interest rate if you can help.

loan amount €12,300 with interest rate of 10.56%
loan repayment of €80 results in €55.25 off loan and €24.75 towards interest rate.

how do you get €24.75 = 10.56% of €12,300

what i really want to do is make an excel spread sheet so i can see exactly how long left on my loan and if i increase my payment how much it will shorten the term of my loan.

chris85

mussha wrote: »

my interest is reducing by about 11 cents a week. and the payment happens at same time every week as its a direct debit payment. im just trying to work out a formula for calculating my interest rate if you can help.

loan amount €12,300 with interest rate of 10.56%
loan repayment of €80 results in €55.25 off loan and €24.75 towards interest rate.

how do you get €24.75 = 10.56% of €12,300

what i really want to do is make an excel spread sheet so i can see exactly how long left on my loan and if i increase my payment how much it will shorten the term of my loan.

10.56% is the interest rate per year, not per week. This is an effective rate of about 0.2031% per week on the balance. So if the balance today is €12300 then the interest accrued in a week from today is €24.97 (0.2031% of €12300).

wmpdd3

You can make a another payment on top of you agreed repayment and this payment can be off the balance only.

The would reduce the interest calculated on the principle weekly.

That's all I know as I made a payment over the counter for a friend and those were the directions she gave me.

wmpdd3

wmpdd3 wrote: »

You can make a another payment on top of you agreed repayment and this payment can be off the balance only.

The would reduce the interest calculated on the principle weekly.

That's all I know as I made a payment over the counter for a friend and those were the directions she gave me.

Is this true?

Does that mean that essentially when agreeing to a loan with the credit union you should (theoretically) agree to the minimum repayment amount possibly, and then over-pay (if you're in a position to do so?)

So essentially, if i agree a repayment of €10 per week, but pay €20, then €10 of that is going directly off the loan itself?



Or have I just confused it all.

chris85

Deleted User wrote: »

Is this true?

Does that mean that essentially when agreeing to a loan with the credit union you should (theoretically) agree to the minimum repayment amount possibly, and then over-pay (if you're in a position to do so?)

So essentially, if i agree a repayment of €10 per week, but pay €20, then €10 of that is going directly off the loan itself?



Or have I just confused it all.

All payments go off the balance. Interest gets calculated and applied to the balance and this is the new balance. Then when you make a payment it goes off the current balance which includes interest.

This thing of breaking down a persons payment into interest and capital is nonsense. All the CU is going is noting that since last agreed payment €25 of interest has built up and your payment is effectively cleared this and the rest on balance and thus any further payments will eat into this.

Boardnashea

€12,244.84*10.56%(annual rate)/365.25(days in a year)*7(days between payments)=€24.78
Seems legit

Once your weekly payment clears the interest everything else will reduce your loan balance outstanding.

If you are lucky enough to pay an extra €2000 next week your interest the following week would be €10,244.84*10.56%/365.25*7=€20.73 saving you approx €4 per week.

If you increase your payment by €5 per week you will reduce the remaining term of this loan significantly and save your self a bundle of interest. It could also give you a buffer if you needed to reduce you payment for a while at a later stage or take a week off for the hols.:)

mussha

thanks very much for the responces have been very helpful.

is it true to say then that if on any giving week i pay my interest of eg€25 i can clear my loan in a single payment of the balance of the loan with no extra intrest payments.

and it it true to say the commetted payment i have to the credit union when getting the loan has no bearing on the interest ammount?

i thought the interest was calculated my the loan ammount *ammount of weeks the cu has predicted it would take you to pay back at your committed ammount. this is untrue?