Paying off an unsecured loan without getting penalties

stoopido247

Help! My wife and I have an unsecured loan ( WITHOUT INSURANCE ) with Lloyds TSB. The amount of this loan is £23K. We are now in a position to pay off this loan completely. There may be penalties for paying off early. I have been told that if we pay off the majority of the loan and then pay the remainder later we will not be penalised. Is this right? How much should we pay/ leave outstanding? How long should we leave between payments?

Robert_Sterling_3

Ask the lender how much it would cost you to pay off the loan immediately.

CLAPTON

It works like this:

Assuming the loan is a normal personal loan then
they are allowed to charge one - two month interest as a early settlement fee.

If you are allowed to make an overpayment and tou then later settle the debt then the settlement fee will be less because the monthly interest will be less.

However this will probably take a bit longer so you may end up paying more interest.

jonesMUFCforever

Clapton is correct.

lotto-dreamer

I read somewhere on these forums that you pay everything except for one last instalment. That way apparently you don't pay any penalties. I'm sorry, I can't find the thread but I am sure it was someone who worked in a bank and suggested doing it this way.