Best way to settle a loan?

APJ

I've got a secured car loan which I want to settle, but I don't want to pay lots of settlement charges.

I remember a few years back a little trick of sending a cheque to knock a chunk off the capital balance, which effectively reduced the term of the loan (or was it the monthly payment?). Then asking for a settlement figure on the remainder, the penalty for which was significantly less then before the part payment.

Does this still work, or have lenders closed the loophole?

itsakidsworld

Read the small print of the loan agreement and see if you have a clause which says you can make an overpayment with no penalties. If so then you could pay this and then ask for a settlement figure? It is probably the same as what you mention above but may not work with car loans, but it does with mortgages. For example you have a 1% closing fee on the outstanding balance so you pay as much as you can to reduce the outstanding balance, then close it.

If you cannot find a contract agreement (lost or whatever) then just go online and type in the credit company details and you should find the answers.