Is anyone good with money? Help please!

[PeckaRolloverAgain]

As you may have read in previous threads I am USELESS with money and have run up a lot of debt over the last few years.

We have recently remortgaged to pay debt off and have a new start.

My question is this.

We have a loan we took out for £12,000 Octoboer 2005. So we have paid 18 payments of £280. (It was a five year loan)

Why, when I rang up to ask for settlement figure was the outstanding amount £9,000?

EEK! Are we being charged a big redemption penalty do you think?

I think only a porton of the £280 will be paying the loan, the rest will be interest. When you took it out, is there somewhere in the fine print that says what you will actually pay back for a loan of that amount? (eg if you are paying £12k over 5yrs, it'll be £200/mth but at £280/mth that's total payment of £16,800)

I think kiwinat's spot on though I'm no financial adviser!

You'll pay £4,800 in interest over 5yrs.

Doh of course with interest added the amount is way bigger than 12,00 so 9,00 left is about right.

And I wonder why I get myself into pickles!

You might find this calculator useful - I put in the amount £12k and worked out the interest rate must be about 14.5% with those payments over 5 years, is that right? In which case after 18 months the amount owing would be about £9k. But this shows you how much of your payment is going on interest at first, only towards the end of the loan is most of your payment actually repaying the loan.

eh? Im {POSITIVE} the loan interest rate was no more than 7.5% - I really wouldnt have taken it at 14.5%

hmmmmmmmm

Hmm, thought that was a bit high but you never know! Um, are you sure it was over 5 years not 4? Or did they add payment protection to the loan, I believe that's paid upfront so could have taken up a good amount of your repayments so far?

Do you have any paperwork relating to the loan? That should give you some idea of how it's structured, or if there are any exit fees. AFAIK they can't charge more than about 2 months interest now as an early repayment charge.

Sorry ignore that, if it was over a shorter period you'd definitely owe less than £9k...I think the answer will be in the paperwork.