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Went in to Wells Fargo about a smallish personal loan. He said there was no early pay off penalty but also said there was really no benefit to paying off early because the interest was built into the loan.
This made no sense to me. If the interest over the life of the loan is $2,000 over 36 months and I pay off in 3 months on a loan with no early payoff penalty how can they still hit me for $2,000?
My experience with Wells Fargo is that 95% of the people working there have no idea what the F they're doing or saying. Complete incompetence. Avoid at all costs!
To answer your question, there IS a difference in interest if paid off early. Refer to my point above.
Went in to Wells Fargo about a smallish personal loan. He said there was no early pay off penalty but also said there was really no benefit to paying off early because the interest was built into the loan.
This made no sense to me. If the interest over the life of the loan is $2,000 over 36 months and I pay off in 3 months on a loan with no early payoff penalty how can they still hit me for $2,000?
Confused
Oh, there's sense to it. Wells wants their money, and they don't care how they get it. The banking industry has Congress in their pockets and that's why we have laws that allow them to do things like that and worse.
If I were you I would pay that loan off as soon as possible and never set foot inside a Wells Fargo branch after that. They are the worst of the worst. Didn't you heard about all the dishonest and fraudulent things they were caught for recently? If you don't know about it here's a good place to start: https://en.wikipedia.org/wiki/Wells_Fargo#Controversies
I would suggest taking your money to another bank as soon as possible or, better yet, get a credit union account.
Went in to Wells Fargo about a smallish personal loan. He said there was no early pay off penalty but also said there was really no benefit to paying off early because the interest was built into the loan.
This made no sense to me. If the interest over the life of the loan is $2,000 over 36 months and I pay off in 3 months on a loan with no early payoff penalty how can they still hit me for $2,000?
Confused
the only way this makes even close to any sense is if WF is using an old concept called the Rule of 78's method of computing interest. Haven't heard of this being used in at least 25 years but it was a method of calculating the interest on a loan that severely front end loaded the interest component such that almost all of the interest was paid in the first few payments.
I doubt that is what they're doing, like the others I think the WF person either didn't know what they were doing or were intentionally trying to mislead you.
If you know the amount you borrowed and the interest rate, you should be able to calculate the interest you should pay over the life of the loan vs what you have already paid. Then you'll know if the WF employee was telling the truth or not. They should be wrong. I don't believe these front loaded type loans are allow anymore. You should do the math to validate for yourself.
Join a credit union and get your personal loan from them.
Many loans, like mortgages, have the first payment mostly interest, the last payment mostly principal, so paying it off early may not benefit you if close to the retirement date of the loan.
If you only need a loan for three months, I'd save save save and use cash three months later.
The moment WF bought my bank, I closed the account.
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