Early repayment

A question about : Early repayment

Hullo,

I've recently repaid a personal loan with Cooperative bank early - Ј12,000, 7%, taken start of July 2014, 48 months, Ј286/month; paid 6 instalments before settling end of Jan.

Thing is, I had a statement last month showing Ј396 interest charged in the first 6 months, up to Jan 4.

Then Ј160 from Jan 4 until closing on Jan 28.

I expected to pay a month's interest penalty for settling in full, but from my rather rough calculations, it appears two months interest have been charged.

On my loan agreement, it says 'one or two months interest on the amount repaid, depending on the terms of your agreement' - that's a bit vague isn't it?!

When I took the loan, and as still advertised on Coop's website, it says 1 month interest for full repayment, two months' for partial paymnet (calculated on amount repaid).

My final statement simply shows the Ј160 as 'interest' - it doesn't itemise anything as an ERC - should it?

I've asked Coop to take another look, and I understand these are rarely calculated wrong, but I'd really like to know whether I've been charged one or two month's extra interest and surely this should be itemised in the final statement? Otherwise how would you possibly know?

Thanks for any help with my dodgy sums...

Best answers:

• Based on your figures it does look as though you have been charged the interest due from the 4th to the 28, and 2 months early repayment interest.
  The clause in the loan agreement seems unusually vague. There is definitely no other term/clause within the agreement that clarifies?
  The statement you have - this does show a nil balance after your payment on the 28th presumably?
• It does, yes.
  They didn't immediately close the loan when it was repaid - I have a feeling they've treated the full repayment as a partial repayment.
  It's definitely all that's in the terms - I was shocked at the vagueness - surely it has to say whether it'll be one month or two?!
  On the Coop website, under the FAQ there's this: "You have the right to repay all or part of the loan at any time. If you repay in full 28 days interest calculated on the balance outstanding will be payable. If you choose to repay part of the loan and there is less than 12 months remaining on your loan term, 28 days interest will be payable. If there is more than 12 months remaining on your loan term, 58 days interest will be payable. This is in-line with the Consumer Credit Act 1974 regulation."
  What's annoying me is they can't even tell me whether an ERC has been applied and whether it's one month or two.
  I haven't had a personal loan before and I'm shocked and surprised that this doesn't need to be stated clearly on the loan agreement and itemised seperately from interest on the final statement.
• Did you ask for and receive a settlement figure in writing, and did you have a set date that you had to pay this by?
• Slightly amused by Foxy Stoat and Ferrety on the same thread
  I phoned up and repaid in the same telephone call, however they sent it out as well - again, it was dated for the day I repaid (28th) when I made the call.
  The letter only gave a single repayment figure - no breakdown whatsoever into interest penalties/ERCs on top of the usual interest on the loan.