Loan - Paying too much?

PopTarts

Hoping someone can help me as I think I'm paying back more interest than I'm supposed to be on a loan I've taken out.

My loan balance is around €10,000.

It's a standard load 8.68%

I agreed to pay back €70 per week but am paying €100 per week of it.

Is there any way to easily calculate how much interest I should be paying?

Toots

Is the loan with a bank or a credit union and also what was the duration of the loan?

PopTarts

Toots wrote: »

Is the loan with a bank or a credit union and also what was the duration of the loan?

Credit Union.

Don't have paperwork here but I think it was just over 3 years based on agreeing the €70 per week repayment.

What does the 8.68% represent? The amount I pay back weekly?

Toots

And was 10k the original amount you borrowed, or what was that?

PopTarts

Toots wrote: »

And was 10k the original amount you borrowed, or what was that?

The amount was €8000 but it added to a €2000 loan I already had (same terms)

I'm paying though around €16 a week interest and while it's reducing as the load reduces it just seems high?

Toots

Ok, so if you took an 8k top up on a 2k existing loan, that would convert to a new loan of 10k.

If you borrowed it over 3 years at 8.68%APR your weekly repayment would be about 71.37, however with the CU, you can set the repayment higher if you want (I've got a car loan with them, and the payment was 155 but I set it to 180) If you're paying 100 per week, you're not paying more interest - what will actually happen is you'll have the loan paid back earlier and will actually end up paying less interest. The 70 odd per week is the minimum you've to pay back, so if for example the 100 is leaving you tight, you can ring them and ask them to reduce it back down to the 70.

PopTarts

Ok ...

For me it looks like this ..

My repayment is fortnightly so €200 goes into my loan but only about €168 comes of my load. The €32 is interest.

I just thought this was really high!

Is it correct?

Thanks. Just can't get my head around it.

As the loan reduces the interest is reducing too but not by a huge amount (maybe 50 cent a fortnight)

XsApollo

PopTarts wrote: »

Ok ...

For me it looks like this ..

My repayment is fortnightly so €200 goes into my loan but only about €168 comes of my load. The €32 is interest.

I just thought this was really high!

Is it correct?

Thanks. Just can't get my head around it.

As the loan reduces the interest is reducing too but not by a huge amount (maybe 50 cent a fortnight)

Well if it’s 32euro every 2 weeks that amounts to about 2500 after 3 years.
Which would seem about right.
And the interest is reducing so the total interest will be less.
I’m no expert tho.

It's one of the biggest life lessons everyone learns, though isn't it - Interest is a bastard.


As far as I know, and I'm open to correction here, with the Credit Union the amount of interest you owe tots up on a daily basis, based on the amount you owe on that particular day. When you log into your CU online banking, the interest gets it's own little section, and you can check it each day.


A good calculator to figure this stuff out, in my opinion, is the CCPC calculator. It's easy to understand and you can work out how much interest you'll pay if you keep to the 70 payment, or how much you'll pay if you overpay.

https://www.ccpc.ie/consumers/tools-and-calculators/loan-calculator/


For example, I've a loan of 80k over 15 years. My repayment is €671 per month. at this rate, I'll pay back €40,738 in interest (5.9%). However, if I repay €701 per month (a negligible difference in repayment at less than a tenner a week), i'll pay back €37,723 in interest. I'll clear my loan a year earlier, and i'll have saved €3,015 in interest.


SO it makes sense (for me, anyway) to pay as much as I can off the loan, as quick as I can, and then i can dawdle a bit towards the end of it.



I remember someone told me once before that the interest rate charged on most mortgages is always charged on the amount you got a lend of in the first place and doesnt decrease with the amount owed. I doubt that there's any truth to that, though? or you'd be in debt for 3 life times?

Mooooo

[Deleted User] wrote: »

It's one of the biggest life lessons everyone learns, though isn't it - Interest is a bastard.


As far as I know, and I'm open to correction here, with the Credit Union the amount of interest you owe tots up on a daily basis, based on the amount you owe on that particular day. When you log into your CU online banking, the interest gets it's own little section, and you can check it each day.


A good calculator to figure this stuff out, in my opinion, is the CCPC calculator. It's easy to understand and you can work out how much interest you'll pay if you keep to the 70 payment, or how much you'll pay if you overpay.

https://www.ccpc.ie/consumers/tools-and-calculators/loan-calculator/


For example, I've a loan of 80k over 15 years. My repayment is €671 per month. at this rate, I'll pay back €40,738 in interest (5.9%). However, if I repay €701 per month (a negligible difference in repayment at less than a tenner a week), i'll pay back €37,723 in interest. I'll clear my loan a year earlier, and i'll have saved €3,015 in interest.


SO it makes sense (for me, anyway) to pay as much as I can off the loan, as quick as I can, and then i can dawdle a bit towards the end of it.



I remember someone told me once before that the interest rate charged on most mortgages is always charged on the amount you got a lend of in the first place and doesnt decrease with the amount owed. I doubt that there's any truth to that, though? or you'd be in debt for 3 life times?

My understanding is it starts out 50/50 capital/ interest and the ratio changes as the loan is paid off with more capital and less interest with repayment amounts staying the same. Mine is a land loan dunno if a house mortgage is different?