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ADVICE NEEDED: Overpayment on a Loan or settling early
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Old 09-09-2011, 8:11 AM
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Default ADVICE NEEDED: Overpayment on a Loan or settling early


I am hoping that someone may be able to give me some advice before I go into the bank to ask, as I would like to have an idea of my options first...

In May 2010, I took out a personal loan with HSBC. It was a loan over 3 years (36 months), paying 150.74 per month. I believe that the APR on the loan is 19% (does that sound right?).

I now have 21 reypayment left - so the total amount left to pay, with the interest calculated is 3,165.54.

Now, ideally I want to pay a large amount of this off now, as I got some money back from a PPI claim from previous loans, so sometime soon I will be getting a payment of 2199.99.

Obviously this is not enough to pay off the loan, however I read on the HSBC website that any loans taken out before October 2010 can't have overpayments made on them - they can only be settled early.

Now maths is not my strong point - if I got a settlement figure now from HSBC on the balance, then I assume that it will be less than the 3,165.54 because that assumes interest over 3 years. Can anyone tell me what the settlement fugure would be?

And, if I cannot make an overpayment...what I think I will do is save the money from my PPI claim in a savings account until the loan amount is reduced enough so that I can use the money I am getting from my PPI to may it back - can anyone work out when my loan will be reduced enough to do this (i.e. in 6 months maybe??)

I hope this makes sense!

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# 2
Old 09-09-2011, 9:50 AM
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Would help if you said how much the original loan was for.

With that info people could give you a rough idea of the settlement figure but the best way to find out is just to call the bank.

Impossible to say if the APR sounds right without knowing how much you borrowed.

If it was 19% then did you borrow 4200? Which would work out to repayments roughly what you are paying.

If those are the figures the balance after 15 payments would be around 2710, and with assuming an early settlement penalty the settlement balance is perhaps around 2790.
After 20 payments it would be around 2200.
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# 3
Old 09-09-2011, 1:42 PM
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Originally Posted by Tixy View Post
Would help if you said how much the original loan was for.
I knew I would miss some important information from that post!

To be honest, I can't quite remember the exact amount the load was for without interest, but 4200 does seem about right. The total amount with interest at the start was 5275.90.

Very unlike me to misplace my paperwork, as I had all my previous loan paper work from over 9 years ago.

I actually popped into the bank at lunch time, and they told me that a settlement figure today would be 2,844.72.

So I am thinking, like you said Tixy, that if I save the money for another 5 months...then the settlement figure should reduce enough for me to to an early reypayment on the loan.

Does that sound about right?
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# 4
Old 11-09-2011, 9:54 PM
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I had a loan with Barclays and when I enquired recently about making overpayments I was told YES - the law had changed late last year so making overpayments was allowed and could done either over the phone or just moving money into the loan account.

Phone HSBC and ask about their stance on it - it should be the case that with them too you can make overpayments.

You could also take the route of going and getting another loan at a lower APR (Nationwide are currently doing one at 6.6% I believe, but shop around on the comparison sites) and EITHER get it for the full amount, and then pay off the HSBC loan and then make an overpayment on the new loan, or more sensibly get a smaller loan and use both sums to pay off the existing loan and you are left with a new smaller one at a lower APR.

Personally I have just recently obtained a new cheaper loan and used it to pay off my existing barclays one (taken out in 2009 before the law changed), paid off most of it as an overpayment and subsequently the tiny little remainder (avoiding the settlement figure interest) so I know for sure overpayments on older loans are possible with Barclays at least. Check with HSBC but certainly getting another cheaper loan and paying it off is an option.
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