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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To ask for for advice with loans? Posting for traffic

18 replies

Loanhelp · 14/01/2019 22:50

Hi, I need some guidance from anyone who can expiation this, as I can't call my bank at this time of night!
I took out a loan with 6% interest with the HSBC, over 5 years. We're paying it back no issue, but I could refinance with lower interest. I borrowed around £12,000, but my statement says I still owe around £17,000, obviously taking into account interest over the five years.
So, if I refinance to pay it back early, do I repay just the amount borrowed, or the larger figure which includes interest for five years of borrowing? There are no fees for overpayment on the loan.

Thanks!

OP posts:
LordEmsworth · 14/01/2019 22:59

Neither. You will repay the amount borrowed plus interest on the time you have borrowed it for. Paying it back early doesn't mean you don't pay any interest at all.

Call HSBC and ask for an early settlement figure - they can tell you exactly how much you will repay, we can't even guess as you haven't told us how long ago you took the loan.

positivepixie · 14/01/2019 23:00

You owe the £17k figure. £5k interest on a £12k loan from a bank seems extremely high though!

Dermymc · 14/01/2019 23:02

That's a very high interest rate, are you sure it's correct?

wheneverythinggoestitsup · 14/01/2019 23:05

You need an up to date settlement figure. Interest is accrued daily so you will pay interest up to and including the day you settle the loan.

BackforGood · 14/01/2019 23:07

Surely, even if you hadn't paid anything back, 6% interest on £12K is £760 (per year). If you paid nothing over the loan the interest would be under £4K, wouldn't it ?

How have you got to £17 K ?

wheneverythinggoestitsup · 14/01/2019 23:07

Also worth noting - you probably will be charged an early settlement figure-
What I have done in the past is settled the loan in full minus the last direct debit amount. So it's an overpayment rather than a settlement then the last direct debit comes out as normal.

Original poster
Loanhelp · 14/01/2019 23:08

Oh I took the loan out 2 months ago :) so not long at all. Tbh, they took advantage a bit, I'm ASD and I thought 6% seemed like a small number as I know one of my friends has 24% interest on his bank loan, and it was with my bank, whom I trusted, so I went for it. It was only when I mentioned it to my dad that he suggested it was too high. I was perhaps a bit foolish to trust a business but it looks like I might be able to change it for a lower rate.

OP posts:
somewhereovertherain · 14/01/2019 23:09

We borrowed 25k from Hsbc over 7 years which had 3k interest. Just settled it after 3 years with £17k outstanding. settlement figure was just under £16k so 1/3rd the original interest. Not sure that helps.

But just ring hsbc and ask for a settlement figure. And 5k interest on a £12k loan is massive.

Original poster
Loanhelp · 14/01/2019 23:09

The numbers are slightly off but that's the gist, thank you for all your advice!

OP posts:
Original poster
Loanhelp · 14/01/2019 23:10

wheneverythinggoes does that mean I won't need an early settlement agreement?

OP posts:
somewhereovertherain · 14/01/2019 23:10

Was using my number for a loan I had.

JugglingMummyof2 · 14/01/2019 23:11

If your loan was at 6% (p.a.? APR?) then there is no way whatsoever that you should be paying £5000 interest on a £12000 borrowing over 5 years. Something stinks if they told you the interest rate was 6% but the monthly repayment x 60 add up to £17000.

JugglingMummyof2 · 14/01/2019 23:14

The numbers are not slightly off, the numbers are massively off. You will have an early settlement penalty but it might be worth paying and going through Sainsburys or First Direct who are in the region of 3.2% APR.

PerfectlyPetty · 14/01/2019 23:16

Please ignore the previous poster - you do not owe £17k if you repay now 🙄

You will have to pay back the £12k, plus debit interest to cover the period you’ve had it - no more than a couple of hundred quid if you’re two months in.

Phone them tomorrow-HSBC can give you a settlement figure there and then over the phone.

PerfectlyPetty · 14/01/2019 23:21

The figures are wrong - if the term is definitely 5 years then your interest rate is 16% op, not 6%. At 16% it would cost £17 k to repay.

positivepixie · 14/01/2019 23:27

Actually **PerfectlyPetty, I was assuming that OP could see the current 'if you pay now' repayment figure online when I said you 'owe £17k' - this is what happens with my bank loan online because I live in 2019.

Original poster
Loanhelp · 14/01/2019 23:33

positivepixie I actually can't see any if you repay now option, that why I read confused! I appreciate you taking the time to reply though!

OP posts:
wheneverythinggoestitsup · 15/01/2019 08:49

Ask for the settlement figure so you know how much you need to pay then pay just 1 month short Smile

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