Thought- one way to encourage people to pay off loan early is to show how much they would save in fees by doing so
I believe Monzo already do this for their loans. Or are you suggesting that Monzo should do this for external loan providers too?
Ah ok I didn’t see the feature, it just said the total paid, not amount of saved by paying off early
Does Monzo charge interest upfront on loans? Just from these pictures it’s not any cheaper, or it’s 0% but I didn’t think Monzo did that
I think it’s only cheaper if you pay the entire balance of the loan off.
Early repayments just seem to reduce the amount you need to repay each month, rather than reduce the period of the loan and therefore the amount of interest paid.
It is actually cheaper if you pay off a month early or pay an arbitrary amount off early too.
The images above are not totally accurate. When you pay off something early now, where it says “reduced by £100” actually says something along the lines of “you save £2.57 interest this month” and it shows a different amount for each month.
You save interest whenever you make any repayment - it isn’t a fixed term and the interest is calculated daily, not at the start of the loan.