Credit Union loan repayments

Etnies

Hi,

I took out a 25k home improvement loan over 10 years last year for a full attic conversation and other bits and pieces of work.

I just can't get my head around the payment / interest rate. When I have got loans in the past from Ulster Bank / AIB the direct debit is taken, minused from the loan, and interest is charged on the remainder which is usually every 3 months, then 3 months later the interest amount is lower as the loan amount reduces all striaght forward.

Now with the credit union it isn't done this way, my monthly direct debit of €270 has the now MONTHLY interest taken from it before it is minused from the loan, and on top of this it is fluctuating, so the interest isn't going down every month, it's going up and down.

Example :

02/03 direct debit 166.93
02/03 interest 103.07

31/01 Direct debit 166.22
31/01 interest 103.78

31/12 direct debit 172.23
31/12 interest 97.77

30/11 direct debit 161.41
30/11 interest 108.59

31/10 Direct debit 211.82
31/10 Interest 58.18

Loan balance 25k


I just cannot understand this, as if my payment is fluctuating, then surely this effects my end date of the loan?

Any help would be appreciated.

Wheety

Was the loan taken out half way through October? That would explain the half interest payment.

November seems like a normal payment. December could be different because of some end of year calculations or interest rebate etc. I'm not too sure.

There is a consistency forming from Jan and Feb (came out in March because of the weekend).

You should now see it continue like that, with the amount coming off the principal increasing slowly and the amount going to interest decreasing slowly.

Etnies

Cheer for that, yeah that makes sense will keep an eye on it

Thanks

Credit unions generally (at least all the ones I know of anyway) calculate your interest daily.

So if you owe 25,000 at, for argument sake, 5.9% - then you're paying roughly €4.04 per day on interest. This reduces each time you pay off the loan, of course.

This is a handy tool that I've been using:

https://www.aie.org/resources/tools-and-calculators/calculate-daily-interest-loan/

Darc19

All financial institutions calculate interest on a daily basis.
But to give you a statement like this would mean multiple pages.

So some banks show it every 3 months, some every month, some every year. But the actual calculation is done daily.