Personal loan, interest charged, very confused?

jayjay2010

Took out a loan of €30k few months ago. Didn't need to use the money so I will be returning the money to the bank.

Interest rate 8.94%
59 monthly payments of €627.92
Cost of credit €7,047.28

I have paid 6 months so far @ €627.92 per month.

But I have also been charged approx €1200 worth of interest in that short time. This seems excessive for 6 months? If I pay this off in full tomorrow, I would have paid €1,200 interest for those 6 months only?

Am I making any sense?

Tabby McTat

jayjay2010 wrote: »

Took out a loan of €30k few months ago. Didn't need to use the money so I will be returning the money to the bank.

Interest rate 8.94%
59 monthly payments of €627.92
Cost of credit €7,047.28

I have paid 6 months so far @ €627.92 per month.

But I have also been charged approx €1200 worth of interest in that short time. This seems excessive for 6 months? If I pay this off in full tomorrow, I would have paid €1,200 interest for those 6 months only?

Am I making any sense?

Sure. Your monthly repayment amount is made up of capital and interest. And the beginning of the loan interest makes up a large amount of the monthly payment, and the interest/capital split reduces with each monthly payment. This is called the amortization schedule of the loan.

jayjay2010

barrac wrote: »

Sure. Your monthly repayment amount is made up of capital and interest. And the beginning of the loan interest makes up a large amount of the monthly payment, and the interest/capital split reduces with each monthly payment. This is called the amortization schedule of the loan.

Thanks for the quick reply. If I return the 30k today (less installments I’ve already paid), do I get any of the interest back that I’ve already paid (€1200) or have I lost that money?

jayjay2010

I took out the money at the end of March and looking to return it in October.

Surely €1200 interest is a bit unreasonable to be charged ?

Sheep Shagger

jayjay2010 wrote: »

Thanks for the quick reply. If I return the 30k today (less installments I’ve already paid), do I get any of the interest back that I’ve already paid (€1200) or have I lost that money?

Interest is front loaded, it's normal enough.

I doubt very much you will get anything back from the lender as it would have been in the loan agreement, they normally include a schedule of repayments giving you a breakdown of the principal and interest.

You could ask, but you signed the losn agreement with that split of principal and interest.

Tabby McTat

jayjay2010 wrote: »

Thanks for the quick reply. If I return the 30k today (less installments I’ve already paid), do I get any of the interest back that I’ve already paid (€1200) or have I lost that money?

Unfortunately not. That's just how bank loans work.

Try looking at the amount of interest you pay in the first few years of a 35 year mortgage if you really want to feel aggrieved!!

Enright

Not what you want to hear, but you should consider the credit union for loans like this, you could pay it back with no accusation of interest early, as in this case. You need to talk to your bank and see if they will give you a break.

jayjay2010

jayjay2010 wrote: »

I took out the money at the end of March and looking to return it in October.

Surely €1200 interest is a bit unreasonable to be charged ?

30k at 9% ish...... Crude figures..... Under 2700 interest in first year so 1200 for first 7 months isn't at all incorrect.

You'll save thousands by clearing the loan now.

huskerdu

You borrowed €30K at 8.94%. 30,000 * 0.0894 / 12 = €223 monthly interest.
This means that after 6 months, you have paid approx €1200 interest.

You borrowed the money and paid the interest. You cant ask for it back.

phormium

As above answer showing the calculations, you were basically renting the money for the last 6 months and 1,200 is the rent give or take. The only thing that would have made it less was a lower interest rate.

Henry Ford III

Enright wrote: »

Not what you want to hear, but you should consider the credit union for loans like this, you could pay it back with no accusation of interest early, as in this case. You need to talk to your bank and see if they will give you a break.

They won't.