The ACTUAL amount of interest occurred on loans clarification?Watch
Before I commit to the student finance loan. I have been doing some research and have a few questions regarding the actual amount of interest occurred on the loan.
I am still trying to find a definitive answer rather than the sugar coated, beating around the bush nonsense I have been told time and time again. I am simply after facts and figures not rainbows & unicorns.
My understand so far is the following:
A) Since I will be starting the course after 2012 and therefore apply for a loan after 2012 I will be on "repayment plan 2"
B) I will be charged interest on the loan from the day of the first payment is made.
1st instalment £750 = September
2nd instalment £750 = February
3rd instalment £1500 = June
C) I will be charged interest until the payment has been paid in full.
D) The interest will be compounded every month.
E) The interest rate whilst studying will be 3% + RPI ( which currently stands at 2.5% so therefore combined will equal 5.5%)
( Source : http://www.sfengland.slc.co.uk/media...ide_1415_d.pdf - Page 10 & 11 )
Now I have quickly complied a spreadsheet.
Attachment = spreadsheet
In the spreadsheet I have kept it simple and basic as I can. I have based the data on a part time studying tuition fee loan of £3000 for 1 year.
1) February additional instalment of £750 is added
2) June additional instalment of £1500 is added
1) Can anyone tell me if the figures I have come up with are indeed correct? or have I completely misunderstood the whole interest situation?.
2) This may be a stupid question. But I understand that if you don't earn over the threshold of £21,000 that you don't make repayments however. Just to clarify, although you won't be making a repayment you will still be occurring interest on the loan every month until the loan is complete paid in full?
( Page 11 - " From the date you become due to repay (after april 2016) until the loan is paid in full. Interest will be based on your income:
• £21,000 or less = RPI
• between £21,000 and £41,000 = RPI plus up to 3%, depending on income
• over £41,000 = RPI plus 3% )
So therefore the interest will still be ticking over every month right?.
Thank you for your time.
This is incorrect, the interest is not applied at a rate of 5.5% each month. I would advise contacting us on 0300 100 0611 where a repayments adviser can advise you of the specifics of your funding.
I phoned up the number you provided and spoke with an advisor called Nichole whom has assured me that it is not 5.5% percentage interest every month like I presumed and that it is 5.5% over a year.
A misunderstanding on my part regarding the meaning of " compounded every month " but now I understand that it is gradual.
Thank you for the help in clearing up the confusion.
- Ice Storm
Glad Nicole was able to clear that up for you.