Barclays Fixed Sum Loan Agreement

maxibyte

Hi,
I have just had Weatherseal out because I am looking for new windows.
However, I could not afford the full amount (£3000) and as a result have taken out their Finance aggreement (over 120 months was the norm).
I intend to put a lump sum down or around £2500 within the first month (I was not allowed to pay more than a £100 deposit. I have also been informed that I can not pay it of before 6 months. Hence I would like to pay of the remaining £400 over the 6 months

What I was unsure about was the wording with regards to the early settlement of the agreement.

"Early settlement of this agreement - if you choose to settle this agreement early, the amount payable per £1000 (unless you borrow less than £1000 where the amount borrowed is based on £100) will be:

When a 1/4 of the term has elapsed £941

When a 1/2 of the term has elapsed £777

When a 3/4 of the term has elapsed £493"

Is this an early redemption penalty?

Surely I would just be able to pay back the £400 over the 6 months and not be charged anything more?

Thanks for any help.

G.

~Beanie~

No, you won't be able to pay it off within six months and not pay anything, you will pay a penalty as described above for early settlement of £941.

The lender makes their money by charging you interest on the sum borrowed, if you repay early then they will charge a penalty as they will not be making money from you from the interest.

What you are proposing would mean that they had lent you the money interest free!

Can't you just wait 6 months before getting the windows, during which time you will be able to get the whole £3K together and not take out any finance?

maxibyte

Hi, Thanks for the speedy reply,
I knew I would be paying back interest on the £400 or so over the 6 months.

If they were to charge me £941 on every 1000 borrowed for early settlement after 6 months, then I would have repaid within the 1/4 of the term I would be charged £941 x 3 (due to sum borrowed = 3K) = £2823 on top of the £3000 borrowed to start so total would be £5832?

Surely £5832 can't be right?
This is more than the total charge for credit if I was to make minimum payment over 120 months - £4742.80.

Or is it a case of having to pay £2823 on top of any interest and repayments I have already paid before repaying the loan. i.e. if I pay £60 pounds per month for 6 months I will have paid £360 + £2823 = £3183. Hence if you leave it longer before paying of the loan (before the 1/4 end) you will end up paying a hell of alot more. e.g. 12 months = £720 repayments + £2832 = £3552.

So in theory they sting you pretty heavily for paying of early if you do it after a while.

BTW, just called up the council and I need full planning permission as it is a flat, hence I will have to cancel the order incase I do not get permission!! Will only cost me a tenner to stop the cheque :rotfl:

It would be good to know the answer to the above tho.

Thanks,
G.

Extant

You took a £3000 loan over 10 years? What on Earth possessed you to do that?