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Thread: HSBC over payments

  1. #1

    HSBC over payments


    I need some advice on what is happening with my loan over payments. To make this simple lets say I've got a loan of 1000 over 10 months(which includes combined amount of the capital and interest) with 100 monthly payments.
    If after 3 monthly payments I make a 500 over payment leaving 2 further monthly repayments until the loan is cleared. Doesn't that mean I've effectively paid 10 months interest for a 5 month loan?
    I'm trying to talk this through with HSBC but it's like banging your head against the wall, you call and they send you to the branch, you go to the branch they say they'll send you information in post which never happens.

  2. #2
    No. You'd pay in the region of seven months interest - the 5 months you have the loan, plus 2 months interest for early settlement.

    However, the value of interest in each month would be markedly different, due to the changes in the capital amount.

    The upshot is that you will pay less interest.

  3. #3
    Thanks, that’s pretty much my thinking. After processing an over payment of say 500 I would expect to see a reduction in the remaining loan amount of 500 plus some interest but that doesn’t appear to be happening

  4. #4
    It depends how they display the balance - with interest included or not.

    Either way, you'll pay less interest.

  5. #5
    I understand your point, I've had this with HSBC before... as they don't show the interest reduction. It's annoying!

    So for arguments sake, you have a loan of 2400 over 24months (including interest). After month 4 you still owe 2000 but then make a 1 off overpayment of 100, you would expect the balance to then be reduced to (say) 1895 allowing for reduction in interest, but it still shows on your account as 1900.

    But as zx81 has said, either way, you will pay less interest. I can only assume they adjust your final payment to account for the saved interest, but as I settled my loan (of sorts) early I don't know what they would have done when I'd got down to, say, the last couple of hundred quid.

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