Loans

[Frnc]

I got a loan for £7500 over 60 months, interest rate is 8.9%. Monthly payment £154.

I've calculated that £101 goes against capital, and £53 is interest. That's about 33% of my payments!

Can someone explain it?

It is like a mortgage, where the interest is all loaded to the early years? Those are a right rip off. I sold a house after paying a mortgage for years, and owed them almost as much as at the start.

If I make overpayments, apparently it changes the duration, not the monthly payment. Obviously the amount owed is less, so the interest is less.

[jansman]

Loans are not a rip off. They are loans. Money from loan companies is lent not just to help you. It’s to help them make money for their companies. A loan is not a charity. It’s business.
Indeed the entire country,if not world, continues upon debt.

Sorry if that isn’t what you want to hear,but it’s reality.

[Vitamin c]

Great subject frnc.

Iv only had 2 loans in my life both for cars both I payed off early because of the extortionate intrest rates .
But at that time I couldn't afford those cars outright so a new car without the risk of breakdown in theory was worth it.

My loans were with well known companies not back street types.

Most religions have condemned usery for thousands of years but its everywhere.

[Kiwififer]

I had a four year loan which I paid off two years early.

It was a necessary evil to get stuff done around the house, I didn’t have enough savings to do the work but I did say when I took it out that I would work my backside off to pay it off which I did.

I’m just about feet clear other than the mortgage. Once I have my visa cleared, every spare penny will be going into my mortgage to get it paid off before I work myself to death. I’m going to have to work till 67 to pay the bloody thing off.

[Frnc]

Loans are not a rip off. They are loans. Money from loan companies is lent not just to help you. It’s to help them make money for their companies. A loan is not a charity. It’s business.
Indeed the entire country,if not world, continues upon debt.

Sorry if that isn’t what you want to hear,but it’s reality.

I don't think loans are a rip off. But I remember when I bought my first house. They said the mortgage was 'portable'. But when I moved, it wasn't at all. I had to pay it off and get a new one. And I owed them nearly as much as when I started, after paying it for maybe 5 years.

[daylen]

Amortization is complex but essentially each month you pay a 12th of 8.9% of the outstanding debt in interest, the rest of paid off the capital. Check out the amortization table here for a full breakdown - https://www.calculator.net/loan-calcula ... zed-result

You do pay more interest at first as a proportion of the payments but that's just how the maths works, it's not that it's front loaded as such. I hope that's helpful!

[jennyjj01]

I got a loan for £7500 over 60 months, interest rate is 8.9%. Monthly payment £154.

I've calculated that £101 goes against capital, and £53 is interest. That's about 33% of my payments!

Can someone explain it?

It is like a mortgage, where the interest is all loaded to the early years? Those are a right rip off. I sold a house after paying a mortgage for years, and owed them almost as much as at the start.

If I make overpayments, apparently it changes the duration, not the monthly payment. Obviously the amount owed is less, so the interest is less.

I could explain it thoroughly, but here's the crux. I have to make some assumptions, because you should actually be paying 155.32.....

At the start of the term you owe a lot, the interest due is a lot and your fixed payment covers it with just enough left over to pay down about £99 of capital.
But as the term progresses, you owe less and the interest due each month is less and your fixed payment will pay off a bit more of the outstanding debt.

As daylen said, interest is not 'front loaded' It's just that the more your outstanding balance is, the more interest is due each month and the less your fixed repayment actually repays.

Now Here's an eye opener.....

You pay them 154 x 60 = £9240 which means your loan cost £1740 in interest. Not outrageous. Not fantastic.

Here's a repayment schedule assuming your interest is calculated fresh every month at 12th of the annual amount. Actually your £154 will leave a residual debt of about £100, but this is close enough...

#Month	Outstanding	Interest Due	Capital Repaid
1	7500	55.31	98.69
2	7401.31	54.58	99.42
3	7301.89	53.85	100.15
4	7201.74	53.11	100.89
5	7100.85	52.37	101.63
6	6999.22	51.62	102.38
7	6896.84	50.86	103.14
8	6793.7	50.10	103.90
9	6689.8	49.34	104.66
10	6585.14	48.57	105.43
11	6479.71	47.79	106.21
12	6373.5	47	107
13	6266.5	46.22	107.78
14	6158.72	45.42	108.58
15	6050.14	44.62	109.38
16	5940.76	43.81	110.19
17	5830.57	43	111
18	5719.57	42.18	111.82
19	5607.75	41.36	112.64
20	5495.11	40.53	113.47
21	5381.64	39.69	114.31
22	5267.33	38.85	115.15
23	5152.18	38.00	116
24	5036.18	37.14	116.86
25	4919.32	36.28	117.72
26	4801.6	35.41	118.59
27	4683.01	34.54	119.46
28	4563.55	33.66	120.34
29	4443.21	32.77	121.23
30	4321.98	31.87	122.13
31	4199.85	30.97	123.03
32	4076.82	30.07	123.93
33	3952.89	29.15	124.85
34	3828.04	28.23	125.77
35	3702.27	27.30	126.7
36	3575.57	26.37	127.63
37	3447.94	25.43	128.57
38	3319.37	24.48	129.52
39	3189.85	23.53	130.47
40	3059.38	22.56	131.44
41	2927.94	21.59	132.41
42	2795.53	20.62	133.38
43	2662.15	19.63	134.37
44	2527.78	18.63	135.36
45	2392.42	17.64	136.36
46	2256.06	16.64	137.36
47	2118.7	15.63	138.37
48	1980.33	14.60	139.4
49	1840.93	13.58	140.42
50	1700.51	12.54	141.46
51	1559.05	11.50	142.5
52	1416.55	10.45	143.55
53	1273	9.39	144.61
54	1128.39	8.32	145.68
55	982.71	7.25	146.75
56	835.96	6.1	147.83
57	688.13	5.07	148.93
58	539.2	3.98	150.02
59	389.18	2.87	151.13
60	238.05	1.76	152.24

[Yorkshire Andy]

I got a loan for £7500 over 60 months, interest rate is 8.9%. Monthly payment £154.

I've calculated that £101 goes against capital, and £53 is interest. That's about 33% of my payments!

Can someone explain it?

It is like a mortgage, where the interest is all loaded to the early years? Those are a right rip off. I sold a house after paying a mortgage for years, and owed them almost as much as at the start.

If I make overpayments, apparently it changes the duration, not the monthly payment. Obviously the amount owed is less, so the interest is less.

I could explain it thoroughly, but here's the crux. I have to make some assumptions, because you should actually be paying 155.32.....

At the start of the term you owe a lot, the interest due is a lot and your fixed payment covers it with just enough left over to pay down about £99 of capital.
But as the term progresses, you owe less and the interest due each month is less and your fixed payment will pay off a bit more of the outstanding debt.

Now Here's an eye opener.....

You pay them 154 x 60 = £9240 which means your loan cost £1740 in interest. Not outrageous. Not fantastic.

Here's a repayment schedule assuming your interest is calculated fresh every month at 12th of the annual amount. Actually your £154 will leave a residual debt of about £100, but this is close enough...

#Month	Outstanding	Interest Due	Capital Repaid
1	7500	55.31	98.69
2	7401.31	54.58	99.42
3	7301.89	53.85	100.15
4	7201.74	53.11	100.89
5	7100.85	52.37	101.63
6	6999.22	51.62	102.38
7	6896.84	50.86	103.14
8	6793.7	50.10	103.90
9	6689.8	49.34	104.66
10	6585.14	48.57	105.43
11	6479.71	47.79	106.21
12	6373.5	47	107
13	6266.5	46.22	107.78
14	6158.72	45.42	108.58
15	6050.14	44.62	109.38
16	5940.76	43.81	110.19
17	5830.57	43	111
18	5719.57	42.18	111.82
19	5607.75	41.36	112.64
20	5495.11	40.53	113.47
21	5381.64	39.69	114.31
22	5267.33	38.85	115.15
23	5152.18	38.00	116
24	5036.18	37.14	116.86
25	4919.32	36.28	117.72
26	4801.6	35.41	118.59
27	4683.01	34.54	119.46
28	4563.55	33.66	120.34
29	4443.21	32.77	121.23
30	4321.98	31.87	122.13
31	4199.85	30.97	123.03
32	4076.82	30.07	123.93
33	3952.89	29.15	124.85
34	3828.04	28.23	125.77
35	3702.27	27.30	126.7
36	3575.57	26.37	127.63
37	3447.94	25.43	128.57
38	3319.37	24.48	129.52
39	3189.85	23.53	130.47
40	3059.38	22.56	131.44
41	2927.94	21.59	132.41
42	2795.53	20.62	133.38
43	2662.15	19.63	134.37
44	2527.78	18.63	135.36
45	2392.42	17.64	136.36
46	2256.06	16.64	137.36
47	2118.7	15.63	138.37
48	1980.33	14.60	139.4
49	1840.93	13.58	140.42
50	1700.51	12.54	141.46
51	1559.05	11.50	142.5
52	1416.55	10.45	143.55
53	1273	9.39	144.61
54	1128.39	8.32	145.68
55	982.71	7.25	146.75
56	835.96	6.1	147.83
57	688.13	5.07	148.93
58	539.2	3.98	150.02
59	389.18	2.87	151.13
60	238.05	1.76	152.24

Lend us a fiver Jenny

[jennyjj01]

Lend us a fiver Jenny

Sure. My interest is a piddling 1% per day, but there's a facility fee of £100 for setting up the facility.

Payable in Bitcoin or LiPo batteries

[Yorkshire Andy]

Lend us a fiver Jenny

Sure. My interest is a piddling 1% per day, but there's a facility fee of £100 for setting up the facility.

Payable in Bitcoin or LiPo batteries

That's the other thing to look for set up and take down fees