Question 1

How is my monthly payment calculated?

Accepted Answer

Your payment is calculated using the loan amount, interest rate and term through standard amortisation. Each payment covers both interest and principal, with the interest portion reducing as your balance decreases.

Question 2

Why does total cost increase with longer terms?

Accepted Answer

Longer terms mean lower monthly payments but more total interest paid. Shorter terms cost more monthly but save significantly on interest overall.

Question 3

Can I reduce my monthly payment?

Accepted Answer

Yes. Extend the term, borrow less or get a lower rate. Bear in mind a longer term means more interest overall.

Question 4

What happens if I repay early?

Accepted Answer

Most UK lenders allow early repayment, though some charge a settlement fee. Repaying early saves interest since it's calculated on the remaining balance.

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